Crisis buying returns: less and cheaper food

The rise in food prices in Spain, with inflation of 14.

25 October 2022 Tuesday 06:40
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Crisis buying returns: less and cheaper food

The rise in food prices in Spain, with inflation of 14.4% in September, is forcing households to limit their purchases and change their eating habits.

As in previous crises and periods of austerity, consumers now buy less and cheaper food. They even switch categories to avoid expensive products. "We see that more chicken meat and less red meat are consumed, less fresh fish and more surimi; in addition to a growth of the private label as in previous crises; people buy less and cheaper and make arbitrations," he said on Tuesday. Ignacio González, president of Aecoc, the Association of Companies of Manufacturers and Distributors.

The rise in prices of the shopping basket is also slowing down consumption, González warned from Santiago de Compostela, where Aecoc celebrates its 37th Congress. If spending grows it is because of inflation, not because a greater number of items are purchased, he has clarified.

The sector fears that this withdrawal will affect Christmas purchases, the most important campaign of the year for producers, manufacturers and distributors. In this sense, González has advanced that the employer expects a good behavior of the restoration, although there is uncertainty regarding distribution (supermarkets and other stores). Precisely because households are already avoiding expensive products, whose consumption tends to increase for these holidays.

How long will the inflationary spiral in food last? From Aecoc they do not venture a deadline -"we are not responsible for it and therefore we do not know"-, but they have reiterated that the rise in light and the war in Ukraine are the main causes and therefore, it will depend on their duration. "The Bank of Spain has already said that it seems that the war will be long," González stressed.

The sector has been very upset with some statements by members of the Government, considering that they seem to incriminate and place the responsibility for the increase in the price of products on the sector, on the value chain.

In this sense, Aecoc has buried the proposal to limit the prices of a list of basic products launched a few days ago by Minister Yolanda Díaz. "It has zero path", Ignacio González has assured, because it restricts free competition and can generate serious problems in companies. “The sector is not being supported; in fact, it is criminalized and pressured with regulation. Mass consumption already supports very high taxation and, if we continue to add costs, we will put the survival of thousands of SMEs at risk”, he explained.

Instead, the employers propose a temporary reduction in VAT on essential foods, especially many fresh foods that could go from a reduced rate to a super-reduced rate. "This is a savings measure for all households, which would encourage consumption and move away from policies that deepen a debt that, finally, consumers and companies will have to pay", considered the president of Aecoc. In this sense, González recalled that the State's public debt has increased by 240,000 million euros since February 2020 and that the budgets for next year still foresee an extra increase of 2.1%.

Other measures proposed by the president of Aecoc is the deflation of personal income tax, the postponement of taxes that require large investments from companies and give legal certainty to companies. “There is a proliferation of regulations that generates insecurity and slows down investment. We need more long-term scenarios that avoid duplication of regulations between Autonomous Communities. We can't keep walking on quicksand."

A study prepared by Aecoc puts figures to the escalation of costs faced by companies in the sector. The rise in the price of electricity and all kinds of raw materials, from feed to feed livestock to paper for packaging or fuel for transport, weighs down the margins, which are already very tight, they have insisted.



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