2023-04-28 04:17:10
On world markets, commodity prices are down. A trend that is not yet reflected in in-store prices, resulting from the latest negotiations between manufacturers and large retailers.
On each shelf of the supermarket, the observation is the same: the waltz of labels makes the receipt go up in flames. In March, food prices rose another 15.9% year on year, according to INSEE figures. An increase that affects fruits and vegetables as much as groceries, meat or dairy products. And which should continue. The boss of System U, Dominique Schelcher, expects inflation to reach “ between 23% and 25% on food by the end of June”. “I’ll be honest, food prices, it’s going to be tough until the end of the summer”for his part warned Emmanuel Macron, Sunday April 23 in The Parisian .
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However, on the agricultural commodity markets, the dynamic is quite different. World food prices have fallen by around 20% over the past twelve months, reports the FAO, the Food and Agriculture Organization of the United Nations. “The majority of commodities are beginning to decline due to a sharp slowdown in global demand compared to 2022,” which was still marked by the post-Covid recovery, observes Anne-Sophie Alsif, chief economist at the BDO analysis firm. On the supply side, thea extension of the agreement on Ukrainian grain exports “also contributed to this decline” price index, complements FAO.
“When the price of wheat goes down, the price of a packet of pasta must go down”
The finding is obvious for vegetable oils, whose world prices fell by nearly 48% between March 2022 and March 2023, when, on the shelves, prices followed the opposite trajectory: +49% over the same period, according to INSEE data. As for cereals, prices on world markets fell by 18.5% in one year. But in supermarkets, the price of a packet of pasta has jumped by more than 21%, and that of cereals for breakfast has increased by 16%.
How to explain such a discrepancy? “The main reason is that the products we currently consume have been negotiated at times when commodity prices were still high”, explains Anne-Sophie Alsif. Every year, large retailers are negotiating with manufacturers on the conditions under which they will buy the products that will be on store shelves the following year. The latest negotiations, which took place this winter in a tense climate, have resulted in a average increase of 10% of the tariffs paid by supermarkets to manufacturers in order to take into account the increase in their production costs (energy, transport, raw materials, packaging, etc.).
Distributors have, however, committed to “spread over time” the increases resulting from these negotiations. “ There are stocks to sell in stores, products for which the frequency of purchase is less strong. These products, with the new negotiated price, will not arrive on the shelves until April, or even May or June., recently explained on franceinfo Nicolas Léger, analytical director at NielsenIQ. Price fluctuations on world prices are therefore not instantly reflected in the consumer basket.
A situation that the Minister of the Economy deplored on Friday April 21, on LCI : “When the price of wheat goes down, the price of the package of pasta has to go down too.” In early April, Bruno Le Maire sent a letter to manufacturers and distributors to encourage them to return to the discussion table now. The Egalim laws, resulting from the states general of food, in fact open up the possibility of resuming negotiations during the year, in the event of significant variations in the prices of raw materials. It is on this basis that the timetable for negotiations was relaxed in 2022, to take into account the soaring prices of food and energy linked to the war in Ukraine.
Industrialists procrastinate
On the side of representatives of large retailers, the government’s request is well received. “Oyes, we have to renegotiate”insists on franceinfo Jacques Creyssel, General Delegate of the Federation of Commerce and Distribution (FCD), who hammers that “oWe can clearly see that on products such as wheat or transport, their prices have fallen a lot”.
“When the costs increased a lot, the distributors agreed to increase the prices. Now, we have to go back the other way.”
Jacques Creyssel, General Delegate of the Federation of Commerce and Distributionon franceinfo
By calling for downward renegotiations, “distributors, who suffer the drop in household consumption, are in their role”analyse Anne-Sophie Alsif. In the first quarter, volume sales in supermarkets have indeed fallen by 5% compared to the same period in 2022, according to the Circana institute. “Their goal is to ensure volume, even if the average basket drops slightly”summarizes the economist.
A l’inverse, “industrialists are more waiting to see if the declines are significant and sustainable”, she continues. The president of the National Association of Food Industries (Ania), Jean-Philippe André, declared himself on BFMTV “ready for renegotiation”, “When the time comes”, “when there will be declines that will be proven”. “We must not forget that we are still under great pressure on packaging such as cardboard and plastic”supports Jérôme Foucault, President of the Association of Processed Food Products Companies (Adepale), with Capital.
“First visible effects on prices in the summer”
Faced with this reluctance, the Minister of the Economy is trying to speed up the process. “If negotiations have not resumed by the end of May, I will call distributors and manufacturers to resume their discussions”, assured Bruno Le Maire. A call hammered again Thursday by the Prime Minister who is waiting for the talks to be held “in the next weeks”. Until then, the government is betting on the anti-inflation quarter, launched in mid-March and for which Elisabeth Borne has promised a “waypoint” mid-June to assess its “efficiency”. Less ambitious than the “anti-inflation basket” initially envisaged, this operation relies solely on the good will of distributors to lower prices on a selection of products of their choice, by cutting back on their margins.
The fact remains that, even in the event of a resumption of negotiations and a potential agreement on a reduction in prices, the impact on the shopping basket will not be immediate. The Prime Minister does not hope “concrete reductions” prices that “by the end of June”. “There will be between two and three months of implementation”, depending on the renewal of stocks on the shelves, anticipates Jacques Creyssel in the columns of the Monde (article subscribers). With “first visible effects on prices in the summer, and especially at the start of the school year”, he believes. A trajectory consistent with Banque de France forecastswhich anticipates a slowdown in food inflation during the second half of 2023, “ once past a peak in the second quarter”.
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