Every time you are at the checkout of the supermarket, bakery or greengrocer, you lose more. Food prices were staggering 15 percent higher than a year earlier.
And the price increase for food has been higher in recent months than the previous month.
Data from data company Superscanner, which monitors supermarket prices, shows that the price of a basic product such as bread is now more than 22 percent higher than at the end of 2021.
This graph shows the price increase of all private label bread products from Albert Heijn, Jumbo, Plus and Dirk from January 2022:
Grain and dairy cheaper
Yet it is not all doom and gloom, because the prices of a number of important raw materials for food products, such as grain and various dairy productshave been going down for a while.
“And if raw material costs remain lower, we will certainly see that in the prices in the supermarket,” says Nadia Menkveld, agricultural and food economist at ABN Amro.
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For some products you are already a bit cheaper. For example, butter was 1.4 percent cheaper in March than one month previously, turns out from figures from Statistics Netherlands. These may only be small price drops, but you also lost slightly less for other grain and dairy products, just like for margarine and pork.
“For me, this is the signal that a turnaround is coming,” says Thijs Geijer, Food sector economist at ING. He thinks that the prices of bread and related products, and of milk and dairy products in particular, will fall.
Grain
Grain is traded below pre-war prices on the international futures market and that should now partly translate into the prices for delivery to bakeries, agrees Jan Willem Bast, chairman of the Committee of Grain Traders.
But that does not mean that this creates room to lower prices for consumers Marie-Hélène Zengerink, director of the Dutch Bread and Pastry Bakers Association (NBOV). Although about 30 to 40 percent of the total costs of artisan bakeries are raw material costs, wages are also rising, she says.
The costs of many products consist of several factors, Menkveld agrees. “For example, pasta not only contains grains, but also energy, labour, packaging and transport, and some of those prices are falling, but others are going up.”
Meat and eggs
The lower grain price means that the price of meat and eggs can also fall, Geijer believes. That’s because too animal feed has become cheaper: almost 9 percent since June last year. Grain is an important component of animal feed.
“The decrease in animal feed costs does say something, especially if those prices have been falling for a number of months and if that decrease is getting stronger, as is the case now,” says Menkveld.
Vegetable and sunflower oil
In addition to products that contain grain or dairy, the prices of certain vegetables, such as peppers, tomatoes and cucumbers, will also fall, says Geijer.
But that, he says, has other reasons. “These vegetables are always a bit more expensive in the winter because less is grown. This winter, the cold in Spain and the high gas price in the Netherlands caused the price to rise even more. Now that we are heading towards summer, more is coming from Spain and Dutch greenhouses.”
Geijer also expects the prices of vegetable oils such as sunflower oil to fall. This is because the price had risen sharply before. As a result, some buyers switched to olive oil, for example, and a lower demand means a lower price, says Geijer.
Coming weeks and months
It may take a while before you clearly see the drop in raw material prices reflected in the store, says Geijer. According to him, there is often a period of three to four months between when raw materials become cheaper and you see it in the store, but that differs per product, says Geijer.
For example, the grain that is processed in a biscuit that you buy in the supermarket may have been harvested several months ago, says Rini Emonds. He is a business consultant at market researcher Cirana.
But the milk in a carton of fresh milk isn’t from months ago, so you’d expect a price drop faster there, he says.
‘Prices remain relatively high’
Not all previous price increases, including raw materials, have been passed on in full. So if raw materials become cheaper, that will not be completely passed on, says Emonds.
Retail expert Paul Moers even thinks that manufacturers will try to take advantage by not immediately lowering their selling prices. “Prices always go up with a rocket and down with a parachute.”
In any case, prices will not fall to pre-Russian invasion levels in Ukraine, warns Moers. “But after endless increases, a reduction is so nice.”
In this video you can see why prices are rising so fast and how long that will last:
