Inflation: "It is wrong to imagine the conflict in Ukraine as the first reason for the rise in prices on the shelves"

Inflation: “It is wrong to imagine the conflict in Ukraine as the first reason for the rise in prices on the shelves”

After the summer holidays, inflation may rise again to +7%. The peak should be reached at the end of the year, at +10%, told ETX Studio Nicolas Léger, expert from the company NielsenIQ who analyzes weekly the increase in prices of consumer products. Explanations.

INSEE announced inflation stood at 6.2% in July. How high is the food?

During the first three weeks of July, we noticed an increase in consumer goods prices of 5.68% compared to the same period in 2021. The situation is unprecedented.

Will prices continue to rise?

To answer this question, we must first look at the cause of inflation. Climatic conditions explain for many categories of food products why they are inflationary. Too much drought or too much bad weather will lead to crop failure. Of course, we think of mustard because it is the symbol of shortages observed in stores in recent weeks. But it is also related to grains, the lack of which has many effects. In July, the frozen meat and poultry category was the most inflationary. Within a year, the rates increased by 22.01%. The price of cereals has increased due to its shortage. Pasta was the second most inflationary category, with a price increase of 17.3%.

From mustard seeds to chickpeas to Mexican peppers, the list of food shortages continues to grow… Unfortunately, global warming is not new. Why, in 2022, is this event more likely to cause inflation?

It’s getting worse! As the world warms, the events become more marked. Moreover, the drought problem does not only affect France. For each product category, there is always a climatic factor to explain the increase in prices. Take, for example, Brazil where coffee crops are punished by the cold.

So the war in Ukraine is not the main reason for the increase in prices on the shelves…

It is wrong to imagine the conflict in Ukraine as the first reason for the increase in prices on the shelves! We have this impression because we have witnessed the shortage of sunflower oil stocks, and the supply of rapeseed oil has been complicated since the beginning of the war. Today, oil is the third most inflationary food category, at +14.1%. But take the increase in the price of pasta. It was observed from September 2021, when the conflict in Ukraine erupted on February 24…

Should we fear another food shortage?

When the price of a raw material increases, it takes a year to have an impact on the stores. This is the lesson we learned during the economic crisis in 2008. This is the reason why inflation has increased since January. The conditions of the harvest will actually be harmful in January 2021. A year and a half ago, we could have made rounds of various potential “threatened” products. We count on a price increase of + 7% at the beginning of the school year and at the end of the year we should experience inflation of + 10%. Will we exceed this level? I am not sure about this. On the other hand, the situation is likely to continue at this stage.

And when can consumers expect to see prices drop?

During the economic crisis of 2008/2009, the situation began to change about a year later. At this time, after the peak that may occur at the end of the year, there is a period of stabilization. It is difficult to predict its duration. In any case, it is higher than in previous economic crises.

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