As you can see when you go to checkout, prices kept increasing in recent years encompassing food, hygiene-beauty and cleaning products. THE successive crisessuch as the Covid-19 pandemic, the war in Ukraine, the explosion in energy prices and the rise in commodity prices, have contributed to this persistent inflation. However, independent analyzes reveal that actual inflation experienced by consumers often exceeds official data, suggesting a partial disconnect with economic realities. This ” overinflation » seems to be fueled by increased margins and profits of certain large groups food industry and distribution.
Inflation higher than official data
The official INSEE indices indicate a increase in consumer prices of 1.2% year-on-year in October 2024. However, independent surveys carried out daily in 6,500 stores equipped with drive-thru services show a different reality. By analyzing a basket of 1,181 products from major brands and private labels representative of purchases in supermarkets, it appears that thereal inflation since the end of 2021 is clearly higher than official figures.
What are the factors contributing to “overinflation”?
Several elements explain this divergence between official data and consumer experience:
- Increased profit margins: studies have shown that margin rate of agri-food industries increased by 2.7 points between 2019 and 2022, reaching 31.2% in 2022. This increase in margins can translate into higher prices for consumers.
- Distributor strategies: large retail brands, in search of market share, can adjust their prices according to their commercial objectives, sometimes to the detriment of consumers. For example, the frantic race for market share between supermarkets and hypermarkets can influence pricing policies.
- Raw material and energy costs: although these costs have a direct impact on prices, their fluctuation does not always justify the increases observed on the shelves, suggesting that other factors, such as profit marginsplay a significant role.
Which products are most affected?
Certain categories of products have experienced more marked price increases than others such as animal feed, salty and sweet groceries, frozen products, cold meats, butchery and fishmongers, alcohol, hygiene, products interview…
| Category | Average Price Increase | Contributing Factors | Impact on Consumers |
|---|---|---|---|
| Food | +12% | Rising raw material costs, increased profit margins | Reduced purchases, switching to cheaper products |
| Hygiene & Beauty | +8% | Commercial strategies of distributors, production costs | Reduction of purchases, search for promotions |
| Maintenance products | +10% | Energy costs, margins of major brands | Reduced consumption, switch to economical alternatives |
| Animal feed | +15% | Rise in raw materials, distributor margins | Reduction of non-essential expenses |
| Frozen products | +9% | Increased energy costs | Changes in purchasing habits |
| Viandes & Charcuterie | +14% | Inflation of breeding costs, industrial margins | Reduced consumption of meat products |
| Sweet & savory grocery store | +7% | Business strategies, rise in raw materials | Search for promotional products |
| Alcoholic drinks | +11% | Increased taxes, distributor margins | Reduction in purchases, prioritization of essential needs |
The impact on consumers
This persistent inflation affects household purchasing powerespecially the most modest. Consumers are adapting their behavior by favoring promotions, reducing their purchases or turning to cheaper products. However, these strategies are not always enough to offset price increases, leading to reduced consumption and growing dissatisfaction.
What are the responses of the authorities and market players?
Faced with this situation, the authorities have taken measures to try to contain inflation. For example, the law promulgated on November 17, 2023 brought forward annual commercial negotiations between suppliers and distributors to January instead of March 2024, with the aim of lowering the prices of consumer products in advance. However, the effectiveness of these measures remains to be evaluated.
For their part, some distributors have implemented initiatives to support consumer purchasing power, such as promotional offers or the development of low-cost product lines. However, these one-off actions are not enough to stop the upward trend in prices.
Even if double-digit inflation is a thing of the past today, rising prices have dramatic consequences on consumption.
The danger of deconsumption and its response to rising prices
With the surge in prices of consumer products, a phenomenon of deconsumption is gaining ground among consumers. Faced with persistent inflation, some choose to limit their purchasesprioritizing only the basic necessities and reducing supermarket spending. Although deconsumption is sometimes seen as a positive response in favor of more responsible and reasoned consumption, it also carries risks. Indeed, by reducing their purchases, consumers can turn away from quality or organic products, favoring cheapest options at the expense of their health and the environment. In the long term, this trend is likely to create a divide between those who can still access healthy products and those forced to compromise, exposing the most vulnerable populations limited food choices and lower quality.
Protecting consumer purchasing power
Inflation of consumer goods in France often exceeds official figures, reflecting a more complex reality for consumers. The increased profit margins of some players in the food industry and distribution, combined with external factors such as raw material and energy costs, contribute to this “overinflation”. It is essential that the authorities and market players collaborate to ensure increased transparency and put in place effective measures to protect consumer purchasing power and restore their confidence.
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