Le Télégramme: Which products grew the most in a year?
Lionel Mogen: According to a NielsenIQ Institute study, pasta prices (both dry and fresh) increased the most, +11.4% on average. But for the first prices it reaches +42%! Cereals and oil products are also on the rise. This is the case for oils (sunflower, rapeseed, palm, etc.): +2.6% on average, but +11% for entry prices. This is a significant increase for this type of product. Finally, at number 3 coffee with +12% to the first price. In addition, we have prepared a control basket with 31 essentials as part of our “Inflation Observatory”: compared to February 2021, the basket costs 2.4% more than in 2022. This is a pretty steep increase from February.
So it’s the most unreliable people who suffer the most?
Today, yes, because entry-level products are growing the most. When we say that pasta of the first price has risen in price by 40%, this is an average value: +60% in some stores. And so it will continue: the average is expected to reach this higher range. This will also extend to other ranges – distributor brands and manufacturer brands – to an extent that we do not know today.
How to explain this increase?
Pasta has had crop problems, especially in Canada. For coffee, as for other products, this is due to climate change: late frosts have destroyed part of the crop. We also have a global demand that is getting higher and higher. Third, rising energy prices. We feel only the beginning of the effects: in the coming months they will increase and affect all other prices. Finally, to all this we will have to add the consequences of the war in Ukraine, in particular on the prices of cereals. This will also have implications for many products.
Why do you say these increases are just beginning?
They are only at the beginning of the journey! Contrary to what we thought, supermarket prices have stagnated for five years. So this inflation is really new. This will be very significant, unheard of compared to everything we experienced before the previous crisis, in 2008. Some time ago we were told about an increase of 3-4%; it will be more than that. Moreover, negotiations between a major distributor and manufacturers have resumed. But how far will it go? We cannot appreciate it. The only thing we can say is that we will have a very, very sharp increase in the prices of consumer goods, especially cereals (such as meat or flour), dairy products, sugar … The increase in commodity prices will have snowball effect on the rest.
Can we be afraid of a decrease in the number of promotions in stores with an increase in production costs?
There will always be stocks: this is a business, and manufacturers and distributors will do everything to hide this period of inflation on their prices. On the other hand, it will be necessary to pay attention to “hidden inflation”: for more than 10% of the goods we checked, the goods on the promotion came out with a promotion more expensive than without it. And it’s safe to say that this way of doing things will multiply: they will reduce the quantity of the product, change the recipe of the product using less noble ingredients to hide the increase…may decide to take certain brands off the shelves because they think it’s the increase is too big for his brand and his customers. This is not a disadvantage, because here it is voluntary.
As prices rise even more in the coming weeks, should we stock up today?
It pains me to say this, but yes. The savvy consumer can take advantage of attractive promotions for consumer products such as toilet paper to stock up on them. Three packages for the price of two, the second for half the price … Make no mistake: there distributors liquidate stocks. The next delivery of the same products will be much more expensive.