Despite slight negative inflation, food prices have “no chance” of returning to their previous levels, estimates economist Philippe Ledent (ING). At the same time, goods and services continue to increase and make daily life more expensive. “It’s not an anomaly.”
For the first time since 2021, food prices are falling slightly in Belgium. Very light, even, since it is estimated at -0.2%. But the phenomenon is rare (and expected) enough to be highlighted.
In detail, there are enormous variations in the evolution of prices of different products. Pizzas and quiches are those which have declined the most in one year (-14.6%). Pasta and couscous fell by 9%, milk by 8%, vegetables by 6%, and even cereals by 5%, according to figures from Statbel. On the other hand, fresh seafood (+32.6%), beer (+20%), olive oil (+17%), potatoes (+13%) and chocolate (+ 3.6%) are among the products which have increased the most in one year.
This slight general decrease in food can be explained simply. First by the considerable fall in raw material prices (cereals, sunflower oil, etc.) in comparison with the peaks reached in 2021 and 2022. In March 2023, food prices jumped by 18%, also due to energy prices and costs. indexed salaries. “In the meantime, the energy has dropped significantly, just like the price of raw materials. All in all, it is normal that prices are increasing less and less quickly, or even decreasing slightly», says economist Philippe Ledent (ING).
The decline is, however, timid and, according to the expert, we should not expect food prices to return to their previous levels. “Simply because certain costs will not decreaselike salaries,” he argues.
Yes, negative inflation means prices are falling. But not necessarily to the point of returning to their pre-crisis levels. “There is no chance that prices will plunge. Because several things continue to increase, apart from the prices of raw materials,” underlines Philippe Ledent.
Negative inflation in food, but daily life is more expensive
Despite this decline in food, Daily life remains 3.37% more expensive than last year. Because various goods and services increased. Cinemas and theaters have become 9% more expensive in one year, fast food restaurants 8%, hotels 6%, and hairdressers 4%, among others. “Apart from food prices, we continue to see an increase in most prices,” confirms Philippe Ledent. It is explained by delayed effects in different sectors of the economy. Businesses, for example, do not have not directly reported the increase in salary costs on their selling prices. This consequence takes a very long time to be reflected and it continues to fuel inflation.”
Outside of food, we continue to see an increase in most prices.
Philippe Ledent
Economist (ING)
Currently, measuring positive inflation (excluding food) “is therefore not an anomaly, because there are always elements whose price increases. In food, the very clear reduction in raw material prices is enough to offset the increase in other costs, but in other sectors, this aspect is not verified.
General inflation “less and less positive”
However, even if inflation of goods and services is positive, “it is less and less”, specifies Philippe Ledent. In other words, inflationary pressure is less. “This is the good news, in the sense that we are not seeing a rebound in prices.”
Even if inflation of goods and services is positive, it is less and less positive.
Philippe Ledent
Economist (ING)
General inflation – positive but less and less, therefore – is supported by energy prices, which have not really increased (except for the price of oil in recent weeks), but which are suffering from the end of measures (energy check, social tariff) aimed at lowering household bills. “Mechanically, this disappearance of aid measures pushes energy prices upwards and creates distortions. This gives the impression that inflation is starting to rise again solely because of energy prices. However, this rise is more linked to ‘base effects’”, adds Philippe Ledent.
