Whether butter, sausage, flour or sunflower oil – many foods have become more expensive in recent weeks. Experts assume that the price shock is not over. Discounters such as Aldi and Lidl, the “drivers for prices in the market”, play a major role in this. You could start a dangerous expensive spiral. An analysis by Anna Schmid.
Grocery shopping has become a tragedy for many Germans. The prices for flour, meat and other products have been skyrocketing for weeks. A bottle of sunflower oil now costs almost six euros in some places.
Figures from the Federal Statistical Office show that food prices in April 2022 were 8.6 percent above the previous year’s level. “This means that the upward pressure on prices has increased significantly,” says a corresponding report. Edible fats and oils, meat, eggs, but also dairy products and fresh vegetables became significantly more expensive.
According to industry experts, there is no end in sight to the price spiral. “We are experiencing an inflationary shock in the food retail sector,” said the consumer expert Chehab Wahby in conversation with almost two weeks ago to the “Handelsblatt”. Aldi and Lidl, among others, would set the pace for price increases, and Wahby describes the discounters as “drivers in the market”.
Aldi, Lidl and Co.: “If the discounters increase their prices, other retailers will follow them”
He assumes that Aldi, Lidl and Co. will continuously raise their prices “in the private label area and for branded goods”. As a result, according to the expert, there will be a broad price movement. That means: If the discounters raise their prices, supermarkets like Rewe or Edeka will do the same.
Peter Kenning also notes that Aldi, Lidl and Co. have an influence on how expensive meat, oil, flour and other products become for full-range retailers. He works as a professor for business administration at the Heinrich Heine University in Düsseldorf. “If the discounters increase the prices, other retailers, for example the supermarkets, orientate themselves on this,” he says in an interview with CHIP. “Among other things, by adjusting the prices for their cheap own-brand products.”
Carsten Kortum, who heads the “Trade” business administration course at the Baden-Württemberg Cooperative State University (DHBW), sees it very similarly. “The price increases have been specified by Aldi Nord/Süd in recent months, and some of the other retailers followed suit on the same day,” he explains when asked by CHIP.
And indeed: in mid-March, the “Lebensmittelzeitung” announced that around 400 items at Aldi would become more expensive. A short time later there were also price adjustments at Edeka and Rewe, as numerous media reports show. However, Kortum points out that the assortments of the discounters are limited to up to 4500 items. So there are also many products that only supermarkets carry and for which Aldi, Lidl and Co. cannot set prices.
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Food is becoming more and more expensive – fear is growing among consumers
Because of the current spiral of prices, many consumers are concerned about the future. What happens when meat, oil, pasta and other items soon cost even more? A current survey by the Institute for Trade Research in Cologne shows: 54 percent of Germans are afraid of their own standard of living due to the spiral of prices can no longer hold.
“Consumers have to be prepared for more frequent and larger price fluctuations. There have always been daily prices for the fruit and vegetable product group. Monthly or weekly prices will be used for other product groups“, says Kortum. At the same time, he believes it is possible that regional products such as asparagus or strawberries become cheaper in good weather conditions.
Business professor Kenning also notes that many suppliers question existing contracts. At the moment, retailers are still trying to counteract this. “If this doesn’t work, retailers pass the higher purchase prices on to the consumer.” Due to the competitive situation Incentive not to be the first to raise prices, but big. “The consumer can benefit from this – at least for a while,” says Kenning.
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Aldi, Lidl and Co.: discounters as inflation winners?
It is therefore likely that food prices will continue to rise – although there are rays of hope, for example with regard to regional goods. As the “Handelsblatt” reports, Aldi, Lidl and other discounters are currently considered inflation winners. “The discounters and cheaper retail brands have benefited from the tighter budgets and high inflation,” says Kortum.
He assumes that in the future “even the middle-class households that have been doing well up to now will increasingly turn to the discounters”. After all, not only food prices have increased in the past few weeks and months. Housing and refueling have also become more expensive.
But why are discounters of all things benefiting from inflation when they are seen as “price drivers”? As the “Handelsblatt” reports, they enjoy a certain basic trust in the population. In contrast to the premium trade, Aldi, Lidl and Co. can afford stronger price increases, said consumer expert Wahby the paper.
Supermarkets like Rewe or Edeka, on the other hand, have a lot to lose. According to Wahby, if you increase the prices too much, customers will resent them more quickly. In the worst case, this probably means that they will do their shopping at Aldi, Lidl or another discounter in the future.
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