Everything that goes up doesn’t always come down. It happens with prices, in particular of food. The association of manufacturers and distribution Aecoc has recalled during its general assembly, held yesterday in Barcelona, ​​that, indeed, a moderation of inflation in the consumption basket is expected from April. But food, as is clear, will not fall in price in a general way nor will we see negative CPI figures. They will simply become more expensive with less intensity.
This is what the president of the employers’ association that brings together large consumer companies in Spain, Ignacio González, remarked: “Unexpectedly, we will witness a progressive drop in the food CPI. We will not see widespread price drops but a slowing of the increase”.
The food CPI hit a ceiling in February at 16.6% year-on-year, and only dropped a tenth in March, to 16.5%, when the general CPI was at 3.3%. González remarked that all analyzes point to a moderation in inflation from April. They expect, therefore, to close this 2023 with an average food CPI of around 12.5%. “We will have to wait until 2024 to halve this year’s inflation levels,” he added.
Prices will stop rising so sharply for two main reasons, predict manufacturers and large distribution. On the one hand, for the base effect. The escalation of the CPI in the consumption basket began just one year ago, in April 2022. It was then that the food price index began to exceed the general one. Therefore, year-on-year comparison will relax the figure.
Secondly, because some of the production costs that have pushed prices up are beginning to give a respite. This is the case with electricity or fertilisers. However, the drought will have an impact on part of the food, warned González. This is the case with olive oil or cereals. Even so, he was hopeful that downward inflows weigh more heavily on the mix that forms prices and that inflation can, indeed, relax from now on.
The president of Aecoc also vindicated the task of the large distribution, which has been in the eye of the political and social hurricane for months due to the rise in food prices, with the margins of its companies under magnifying glass and direct attacks directed from the Podemite part of the Central Government. “We cannot be demonized for making money”, he concluded, since companies, in a healthy market economy – he continued -, must make profits to generate wealth. In this sense, the president of Aecoc explained that the trade margin has fallen by 0.4% in the last quarter of 2022, according to data from the Bank of Spain.
In this sense, the employers’ association of large consumption defends measures that, in its opinion, would moderate the rise in prices. Among others, extend the reduction in VAT – implemented by the Spanish Government on a series of basic foods and which expires on June 30 – and also apply it to meat and fish, products that are sold less because consumers they can’t afford to buy them as often as they used to.
