Italian spending has changed in recent weeks with the war in Ukraine. The “irrational” dynamics in the agri-food sector in March prompted many Italians “to stock up on products for fear of not finding them on the shelves”. The composition of the shopping baskets has changed compared to the previous months, write Today.it colleagues, due to concerns about the supply of some raw materials due to the conflict between Russia and Ukraine. That explains Alessandro Masetti, Head of Fresh and Frozen Products at Coop Italia. During a hearing before the Agriculture Committee of the Chamber of Deputies, Masetti explained that over the past month he has seen an increase in “the volume of certain categories such as sugar, semolina, flour, rice”. Strong increase also in seed oil, which increased the weight of the average Italian spend to 35% of total purchases.
How Italian spending changed with the war in Ukraine
Not only that, but the war in Ukraine has also changed the relationship between the food industry and consumers, with the former not “absolutely failing to unload the entire March raise for sale”. For example, if the cost of semolina pasta increased by 24% up the supply chain, only 14% was passed on to sales. The concern is what might happen if price increases are passed on to consumers in full, or almost in full. “We believe there could be a sharp drop in sales given this further price increase,” Masetti said.
In March, too, there was a 13% drop in fruit and vegetable volumes, reported Claudio Mazzini, commercial director of the fruit and vegetable sector at Coop Italia. “This risks triggering two opposite spirals, that of rising prices that we see all the time, and that of falling consumption that, when they cross, becomes a very dangerous storm,” Mazzini said. Of particular concern is the impact that market developments could have on small and medium-sized businesses and on Italian agriculture.
Mazzini specified that with regard to the fruit and vegetable sector and the meat sector, “one point of consumption is lost for every two points of inflation”. So if the estimated inflation range of 8-10 is confirmed to be real at the end of the year, that means a 4-6 point reduction in consumption, not seen since the 1974 oil shock. Hence the need for “urgent support measures, not for large-scale distribution, but for consumption, both in terms of VAT and energy costs”.