A record number of European food manufacturers are looking to raise grocery sales prices in the months ahead in response to higher input costs, according to research conducted by economists at ING.
While the impact of food inflation varies across regions, products and consumers, higher costs and prices are likely to stay for a longer period, EMEA [Europe, the Middle East and Africa] head of food and agri at ING, Kiran Sanchit said.
Business surveys indicate that selling price expectations from EU food manufacturers are heading higher, ING said, including major producers such as Nestlé, Unilever and Danone which all expect their input bills to go up by 10 to 15% in 2022.
Besides higher costs for packaging, energy and transportation, prices of food commodities, in particular, stayed around their all-time high in April, according to ING research.
Sanchit commented that consumers might need to switch from one product to another or prefer private labels over branded ones. He added:
“We might actually look at a fairer price of food now compared to what we have been used to, taking into account scarcity of natural resources and environmental impact.”
ING economists explained that when the cost of food goes up or down, sales quantities of cereals, oils and fats react less to price changes than those of fruit, vegetables, meat and dairy.
Food inflation by region
Non-western countries are hit hardest by food inflation, with prices up by 60-70% in Turkey and Argentina in March this year, according to ING research.
Food inflation and the availability of food, ING economists said, are a particular threat to conflict zones and countries in the Middle East and Sub-Saharan Africa.
Increases in food prices ranged from 2.5% in France and Ireland, to more than 10% in some eastern European countries and the Baltics during the first quarter of 2022, ING said.
Food inflation in the US and Canada is relatively high compared to the EU average, with a US price index for groceries at 10.8% in April. However, grocery spending makes up a smaller share of the total household expenditure, ING said.