Food prices soar despite inflation easing

Despite the announcement by the Hellenic Statistical Authority on Wednesday that inflation had eased for the fourth consecutive month to 7% in January, the food price index was up to 15.4%, meaning that so-called food inflation remained in the double digits for a 10th consecutive month out of the last 12, and above the 15% level for a third consecutive month.

Based on market estimates, food inflation will remain at very high levels until the end of the first half of the year at the earliest.

A telling example of the current situation was that given by Sofoklis Panagiotou, president of the Hellenic Brewers Association, on the sidelines of an event Wednesday for the establishment of the Visitable Brewery Label.

“Even the cost of a glass bottle is 100% higher compared to last year,” he said. “Companies in several categories announced [new] prices at the beginning of the year. We have been working with the same price list since February 15, 2022, so none of the cost increases that occurred after the outbreak of the war in Ukraine on February 24, 2022 have been incorporated,” he added.

This essentially reflects the wider trend in prices of raw materials and especially secondary materials (such as packaging materials – glass, plastic, paper) not having fallen and that there is a time lag in passing on the increase in production costs to customers.

Indicatively, producer prices for farmed fish have incorporated almost none of the increases in production costs that started at the end of 2021 and are expected to be incorporated this year for the simple reason that the growth cycle of fish is 18 months.

At the same event, Alexandros Daniilidis, managing director of Athenian Brewery – a subsidiary of beer giant Heineken – said the company raised prices last year by 6% and 9% this year. 

On Tuesday the management of Coca-Cola HBC warned of price increases in 2023 as it estimates that the cost production per unit case will rise by 10-13%.

Mondelez (now owner of Chipita) has already moved on to repricing, with its management seeing no signs of a cost de-escalation yet, while continued repricing was also announced last week by Unilever. 

Another reason why food prices have remained high is the small size of the Greek market, which has not been conducive to price competition over time. Analysts also pointed to the shift of consumers toward special offers.