For many in Germany, it is a major nuisance: prices in supermarkets have risen drastically in the past year and a half – after many things had already become much more expensive during the pandemic. Now there are first signs of hope. But many have doubts about how resilient this is.
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In any case, Germany's discounters and supermarkets have lowered their first prices, according to their own statements. At Aldi, for example, butter costs 58 percent less than in the middle of last year. Noodles became up to 38 percent cheaper, according to the company. Lidl advertises that it has lowered prices for more than 700 product groups since the beginning of the year – most recently for pasta by 20 percent.
Is this just advertising – or can you already feel it in the official statistics? After all, the latest inflation figures continue to show on average high price increases for food in April compared to the same month last year, i.e. April 2022 – but for the first time in a long time a decline in average food prices compared to the previous month, March 2023: On average, food prices now fell by 0.8 percent.
Sunflower oil significantly cheaper again
Many are still suspicious. ECB President Christine Lagarde, when asked by the F.A.Z. whether the worst of the food is now over, said she would like to announce it – after all, there has recently been a decline in inflation in this area – but unfortunately the further development is not yet certain.
A certain glimmer of hope is shown by prices at the wholesale level. On average, they fell in April for the first time in a long time compared to the same month last year. Among other things, there was a significant drop in prices for grain, raw tobacco, seeds and animal feed, by an impressive 25.2 percent.
ECB Chief Economist Philip Lane had indicated in a recent interview that he sees the calming of prices at the upstream stages of producers as a good sign that food prices at the consumer level could soon develop somewhat more positively.
And Bundesbank President Joachim Nagel said in an interview that he himself always follows prices very closely when shopping at weekends. In the case of butter in particular, he noticed that it had become somewhat cheaper again after the price increase last year. He says: "Overall, the peak of inflation is behind us."
If you take a closer look at the statistics on food prices, various effects overlap. Some goods in the supermarket had suddenly become very expensive after the start of the Ukraine war because there was actually a connection to the country in the delivery. This was the case, for example, with sunflower oil. At times, the shelves were emptied because the supplies did not come and because the news of the lack of supplies seduced people to hoard. During this time, the price had risen extremely. As a result, things that were considered a substitute for sunflower oil, such as other edible fats, also became more expensive. In the meantime, this has been reversed somewhat. For example, prices for sunflower and rapeseed oil fell by 8.2 percent compared to March. On an annual basis, however, this was still a price increase of 28.3 percent.