Agricultural food prices rose by 31% in 2021 and they will increase by a further 23% in 2022 due to the general rise in fuel, electricity and fertiliser costs caused first by the pandemic and then by the war in Ukraine. This, according to a report on European food inflation by Allianz, has a direct impact on the price of food for Europeans, who will have to pay 243 euros more on average this year than they did for the same items last year.
This problem does, of course, affect Spain, although the report says the extra amount shoppers in this country have to pay will be lower than elsewhere, at 200 euros. It is because years of low agricultural yields have been exacerbated by the Russian invasion of Ukraine, affecting not only basic foods such as wheat and oil, but the price of alternative products.
In total, Europeans spend 2,287 euros a year on food, while in Spain the amount is 2,100 euros, a figure which will go up to 2,300 because of the price increases.
And things could get worse, because the prices paid by the public are still not reflecting all the increased costs of raw materials in the past 18 months. The report shows that producers of foods and drinks in the euro zone have raised their prices by an average of 14% since the beginning of 2021. In supermarkets, the most significant increases have been oils (+53%), flours (+28%) and pasta (+19%), but on average prices have risen by just 6% because retailers have not passed on even half of the producers’ extra charges to consumers.
Allianz says in the report that episodes of high inflation in the past show that retail prices adjust to those of producers “with a certain delay”. In other words, high inflation combined with a downturn in sales after the pandemic is putting pressure on business profits, and this will probably mean an increase in prices for the consumer is in the offing.
The report also says that the increase in food prices, in conjunction with a general rise in the cost of living (fuel, electricity, rent, food eaten outside the home, etc) is reopening the debate over providing assisance to alleviate the burden on the most vunerable households.