What goes up doesn’t always come down. It happens with prices, particularly food. The association of manufacturers and distribution Aecoc has recalled during its general assembly, held this Thursday in Barcelona, ​​that, indeed, a moderation of inflation in the shopping basket is expected from April, but food will not drop in price. They will only become more expensive with less intensity.
This has been remarked by the president of the employers’ association that brings together consumer goods companies in Spain, Ignacio González: “Except for unforeseen events, we will see a progressive drop in the food CPI. We will not see generalized price drops, but rather a slowdown in the increase.”
The CPI for food reached its ceiling in February with 16.6% year-on-year, and only fell one tenth in March, to 16.5%, when the general CPI stood at 3.3%. González has explained that all the analyzes point to a moderation of inflation as of April. In this way, they hope to close 2023 with an average food inflation of around 12.5%. “We will have to wait until 2024 to halve the inflation levels of this year,” he added.
Prices will stop rising so sharply for two main reasons, predict manufacturers and large retailers. On the one hand, due to the base effect. The rise of the CPI in the shopping basket began just a year ago, in April 2022. Therefore, the year-on-year comparison will relax the figure. Secondly, because some of the production costs that have pushed prices up are beginning to take a breather. This is the case of electricity or fertilizers.
However, the drought is going to have an impact on part of the food, González warned. This is the case of olive oil or cereals. Even so, he has shown hope that downward inputs weigh more heavily on the mix that makes up prices and that inflation can, indeed, take a breather from now on.
The president of Aecoc has also vindicated the work of large distribution, which has been in the eye of the political and social hurricane for months due to the rise in food prices. “We cannot be demonized for making money,” he commented, since companies, in a healthy market economy, have to make a profit to create wealth.
He has also stressed that the trade margin has fallen by 0.4% in the last quarter of 2022, according to data from the Bank of Spain.
Among other measures, González has opted to “extend the VAT reduction” -implemented by the Government and which expires on June 30- and also apply it to products such as meat and fish, to restore purchasing power to consumers before inflation.
