Whether it’s pasta, coffee, beer or toilet paper: there seems to be only one direction for prices in supermarkets and discounters at the moment – upwards. One of the reasons for this: the war in Ukraine, which gives prices an additional boost after the increases in the past few weeks and months.
“The increase in energy prices and logistics costs caused by the Ukraine war will make itself felt in people’s everyday lives – with every purchase in the supermarket or discounter,” predicted Boris Hedde, managing director of the Cologne Institute for Retail Research (IFH). Because the prices would now rise even more than they did last anyway. “It will be a challenge – especially for socially disadvantaged families.”
Hedde is not alone in this assessment. Retail expert Robert Kecskes from the market research company GfK is also convinced: “The conflict will further increase the pressure to raise prices. Inflation will definitely be significant.” The prices in the German food trade were already in motion before the Ukraine war due to rising raw material prices and energy costs as well as corona-related problems in the supply chains. According to the Federal Statistical Office for Food, consumers had to pay 5.3 percent more in February than twelve months previously.
The price increases can be found almost everywhere: Tchibo made coffee more expensive. Large German breweries announced price surcharges in rows, as did manufacturers of toilet paper and handkerchiefs. Beef went up in price enormously, as did poultry and tomatoes. Rewe boss Lionel Souque complained at the end of last year: “There have never been so many demands for price increases from the industry as this year.” And that was before the Ukraine war.
Because the global increase in energy prices triggered by the war not only makes heating your own four walls and driving a car more expensive. The production of many products from bread to detergent is also becoming more expensive. “Everyone works with electricity and gas – including Nestlé and Unilever,” emphasized an industry insider. In the case of meat, for example, the energy costs are included in the costs from the production of the seed for the animal feed through the entire value chain to the freezer in the supermarket. The industry fears that logistics costs will also increase sharply after the Russian invasion. “Manufacturers will certainly try to pass these additional costs on to retailers and consumers,” said Kecskes.
This can already be clearly felt at the petrol stations in particular. Russia’s war against Ukraine has pushed gas prices to record highs. Consumers had to pay more for a liter of diesel on Sunday (March 6th) than for Super E10, as the ADAC announced on Monday. Nationwide, a liter of Super E10 costs an average of 1.965 euros. Diesel was even two cents more expensive than Super and rose to 1.984 euros. There is no relief in sight: A possible freeze on imports of oil from Russia drove oil prices to their highest level since 2008 at the start of the week. According to the Federal Ministry of Economics, around 40% of Germany’s crude oil imports currently come from Russia.
Industry experts assume that the burdens from the interaction of higher living costs, the threat of back payments for heating costs and increased fuel prices could significantly change the shopping behavior of German citizens in the coming months. “The expected price increases could change shopping behavior and ensure that more people buy from discounters again,” believes Hedde. A small consolation for the plagued customers: there will still be special offers. Kecskes says that there could be even more price campaigns in the future than in the past few years because the competition for customers’ ever tighter household budgets is likely to intensify.