High inflation
Those with a sweet tooth are threatened with a price shock for sugar
By Laura Stresing
04/14/2023 5:58 p.m
Inflation is slowly subsiding – at least by and large. For individual products, however, the price rally continues. Above all, the sugar prices point to a “pickle time” for those with a sweet tooth.
Consumer prices in Germany have risen by an average of 7.4 percent compared to the previous year. This was determined by the Federal Statistical Office for the month of March and recently confirmed again.
This means that the official inflation rate remains at a very high level. At first glance, the hoped-for relaxation on the price front is finally becoming apparent. In January and February inflation was 8.7 percent each. In the autumn of the previous year, it had even climbed into the double-digit range.
However, consumers notice little of the apparent decline when they go about their daily errands. On the one hand, a falling inflation rate in no way means falling prices in all areas, but merely a slowdown in price increases across all goods and services.
And secondly, the reversal in the inflation rate is mainly due to developments in the energy market. In March 2022, energy prices had exploded in the wake of the Russian attack on Ukraine. A year later, the prices for energy products are on average “only” 3.5 percent above the level at that time. Fuels have even become cheaper said the Federal Statistical Office.
Households are feeling the core inflation
On the other hand, core inflation, which is so important for household spending, remains high. The Federal Statistical Office emphasizes in particular the price development for food. These have increased in price by an average of 22.3 percent compared to the same month last year – that is three times as much as the total of all consumer goods and services recorded with the consumer price index.
But there are also big differences in the food sector. Due to their production, certain food groups were and are earlier or more severely affected than others by the inflation dynamics that have persisted for more than a year. Vegetables, for example, became much more expensive last year due to poor harvests and increased transport costs. The Ukraine war and the energy crisis also had an early impact on bread and grain products.
Sugar currently stands out as a major price driver. A strong increase has been observed in Germany since October 2022. Little by little, confectionery is also affected. The business magazine “The Economist” warned at the beginning of the year that sweets would soon be the next “victim” of inflation might notice.
This is also confirmed by the new data on price trends for food, which the Federal Statistical Office presented on April 13th. The increase in the price of biscuits is particularly noticeable. In March 2023, these were on average a good 33.5 percent more expensive than in the previous year. Cakes and other sweet pastries are also badly affected by inflation. No wonder: in addition to the increased prices for baking ingredients such as flour, eggs, milk, cream and quark, high energy costs are also noticeable in baked goods.
Edible oil levels off at a high level
A list of the food groups with the highest price increases since 2020 (top chart) shows that a new record level was reached almost everywhere in the past month. Only for edible oil do prices now seem to be leveling off at a high level. Compared to the previous year, this is still an increase of more than 54 percent.
For fresh fruit and vegetables, prices have traditionally been more volatile due to fluctuating supply. In the meantime, even falling prices can be observed here. Tomatoes, for example, were cheaper at the beginning of the year than in the previous year. Recently, however, the trend has reversed again.
In the case of sugar, on the other hand, the trend has been unbroken for months. In March, consumers had to pay almost 71 percent more for sugar than in the same month last year – that was again one percentage point more than in February. The fact that downstream products have not yet risen in price to the same extent is already an indication: the big sugar shock on the sweets shelf is still to come for buyers.