In February a first alert sounded: inflation was beginning to affect consumer goods, with a price increase of 0.52% compared to the same month of the previous year. March confirms the trend. Especially, annual commercial negotiations between the main distributors and manufacturersconcluded at the beginning of March, aggravate the situation.
In fact, the increase in food prices reached 1.26% last month, an annual low, according to the latest Nielsen IQ study. And the affected products are more and more numerous: while in February only 68% of the categories were affected, now they are 81%, underlines the specialized firm. For three products, inflation is already over 8%: they are pasta, legumes and frozen meat.
The prices of the main national brands also grow
Last year’s weather events, such as the frost in April 2021, as well as the volatility in world grain prices, which has been going on for months and was aggravated by the war in Ukraine, partly explain these increases.
But according to Nielsen IQ, the main cause of this acceleration in inflation is “the implementation of new rates that manufacturers and distributors agreed upon during trade negotiations” closed March 1. Proof of this is that between March and February 2022 the prices of the main national brands, on which this negotiation focused, grew by 0.87%, while a month ago they continued to be deflationary, and that in the same period the Inflation for all foods stood at 0.67%.
“The price of national brands is now increasing in a similar way to private labels,” note the Nielsen IQ.
For the first time after several years of deflation, in fact, these negotiations have resulted in an average increase in tariffs paid to manufacturers of 3%. A result, however, insufficient for the latter, who demanded increases of up to 8%, necessary in their opinion to compensate for the increase, in 2021 and 2022, of all their production costs: agricultural raw materials, energy, packaging, logistics. . ..
An evolving situation
Due to the worsening of the inflationary context linked to the war in Ukraine, the government has already asked distributors and manufacturers to come back to the table. He even managed to get them to sign a charter, guaranteeing, on the one hand, the reopening of these negotiations by the distributors even when the legal conditions are not strictly complied with, and, on the other hand, the transparency of the suppliers regarding the increases they claim.
Therefore, the situation continues to evolve, especially since two weeks ago only 10% of the contracts had been reopened, according to the Ministry of Agriculture and that, according to the law, the distributors have one month from the sending of the renegotiation request. of your suppliers to react.
The great volatility of international markets could also quickly make these renegotiations obsolete, many observers fear. And the new episode of frost that has just hit France could have consequences on the prices of fruit next summer, as well as on canned goods in the fall.
“The forecasts change every day,” he observes. Emmanuel cannesNielsenIQ France expert in prices and distribution services, who, however, raises the possibility of an average inflation of consumer products of 2% in April and 3.5-4% by the end of the year.
Cases of breakouts to the upside
The truth is that this uncertainty is already pushing some French people to “so-called precautionary purchases with a greater than usual storage effect”, that increase sales of certain products and sometimes cause stockouts, notes Nielsen IQ.
During the last three weeks of March, sales of staple product categories increased strongly, in value due to inflation, but also in volume, despite a gradual slowdown in this trend. This is particularly the case for oils, flour and pasta, for which the number of incidents of shortages in mass distribution, excluding discount stores, increased respectively by +37%, +26% and +21%. between February 21 and March 27, 2022.
LHowever, professionals want to be reassuring about short-term stocks.
“In France, today, there is no shortage for daily consumption and there will not be until the summer,” Michel-Edouard Leclerc, president of the E.Leclerc strategic committee, told BFMTV on Sunday, quoted by AFP. “Pasta, there is. Sunflower oil, our stocks go until June,” he said.