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Global Economy

Warning of higher food prices

Life in Germany has become significantly more expensive in recent months. And an improvement does not seem to be in sight at first: According to the retail giant Rewe, consumers in Germany have to adjust to even higher food prices because large suppliers in particular are continuing to screw up prices. "Manufacturers are currently announcing new price increases to us every week," said Rewe boss Lionel Souque on Wednesday evening before the "Business Journalists' Association" in Düsseldorf.

The background to this is the rising energy, raw material, logistics and personnel costs. "We don't wave through every price increase, but check whether it is understandable," said Souque. The retail giant defends itself decisively if it considers the surcharges to be unjustified. Especially among the multinational consumer goods manufacturers there are free riders who want to benefit from the current price wave. "We're fighting brutally against it," said the Rewe boss. "Many multinationals are making more dividend income than last year."

Large manufacturers in particular are putting on the pressure

Retailers and food manufacturers are struggling with rising prices for energy and logistics, for example, but raw materials have also become more expensive as a result of the Russian attack on Ukraine. "Many come and announce price increases of ten percent and say Rewe should pass this on to the customer," reported Souque. "That's totally unrealistic." However, the majority of suppliers are behaving sensibly, said the Rewe boss. "But we have a problem with the really big manufacturers who have the power to enforce demands," he added.

Competitor Edeka has also warned its suppliers against excessive price demands. "Food must not become a luxury good," said Edeka boss Markus Mosa. For its part, Rewe had already announced that it would not want to pass on all increases to customers and thus accept the impact on profits.

More interest in grocers' own brands

Rising inflation and high energy prices are also having an impact on consumer shopping behavior. Customers are switching from branded products to grocers' own brands, they are paying more attention to promotional prices and there is a clear trend towards discounters, said the Rewe boss. The Rewe subsidiary Penny is currently doing better in terms of sales than in the previous year, which was shaped by Corona.

Inflation in the euro area rose by 9.1 percent year-on-year in August, driven by skyrocketing energy and food prices, according to the Eurostat statistics office. In Germany, the rate had reached 7.9 percent.

Statistician: Retail trade recovers slightly in July

According to the Federal Statistical Office, however, the retail food trade has recovered somewhat from the slump in sales of the past few months: Sales grew by 2.1 percent in July compared to the previous month, after there had been a slump in the three months before. Compared to March this year, however, 6.5 percent less food was sold, compared to the previous year the minus was 4.4 percent. Total retail ended July with a 1.9 percent increase in sales compared to June. Compared to the same month last year, retail companies in Germany made 2.6 percent less sales in July.

"The joy about the surprisingly good result should not last long," said the chief economist at Hauck Aufhäuser Lampe Privatbank, Alexander Krüger. "That doesn't change the fact that consumption is on the decline. With the sharp increase in inflation and the gas surcharge, consumers will continue to get a grip."

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