By Gary Dagorn, Assma Maad and William Audureau
Reserved for our subscribers
Close-upBetween the post-Covid recovery, the war in Ukraine, packaging costs and episodes of extreme weather, the reasons for price increases are more diverse than it seems.
In one year: +5.2%. This is the average increase in consumer prices between May 2021 and May 2022, according to the National Institute for Statistics and Economic Studies (Insee). Unheard of since September 1985. After the Covid-19 crisis, inflation was expected in response to massive stimulus policies and a sudden economic recovery. But the war in Ukraine, climate hazards, animal diseases and speculation have aggravated the situation considerably.
So much so that for the majority of the twenty experts, economists, industrialists or sector representatives consulted by Le Monde, the price increase has only just begun, albeit in different proportions from one type of product to another. Decoders examined the main families of everyday products to understand why so many companies are struggling and why prices are soaring.
Fuels: + 30% in one year
Heating: + 31% in one year
According to INSEE, while rents only increase slightly, the other costs related to housing (fixed costs, heating, maintenance) have suffered significant inflation in recent months, especially in connection with energy prices.
🛢️ Domestic heating oil: Oil is rising and the euro is falling
The price of domestic heating oil, which is derived from crude oil, has almost doubled within a year: + 96% since April 2021 and + 63% since the beginning of 2022. The reason? “As with all petroleum products: the high price per barrel and an unfavorable euro-dollar parity,” explains Frédéric Plan, General Delegate of the French Federation of Fuels and Heating (FF3C).
The result: the almost three million French people who heat with heating oil “divide” their purchases and often have far below-average quantities delivered to them. According to FF3C, April deliveries were down 41%.
🏠 Gas: a market under pressure due to the war in Ukraine and higher demand
The average gas price (combination of town gas, natural gas, LPG) rose by 52% last year and by 8.7% since the beginning of the year. But the outbreak had started earlier. “The first increase dates back to autumn last year,” recalls Thierry Chapuis, General Delegate of the French Gas Union. One of the reasons is the energy transition that has started in some Asian countries, replacing gas with coal. The very strong recovery at the end of 2021 also drove demand for energy and gas. »
The second increase was caused by the war in Ukraine. “This led to significant price spikes in an already very tight market. There hasn’t been a major drop in Russian gas purchases, but it’s a very volatile market, the slightest piece of bad news tenses markets and drives up prices. »
🏢 City heating: an increase due to the price of gas
The gas price increase has also pushed up the average price for district heating (+58% last year and +6.2% since the beginning of January). “Obviously, a network that runs 100% on gas suffers much more than a network that runs on 70% energy, for example from geothermal energy or the recovery of heat from waste incineration,” explains Pierre de Montlivault, President of the Federation of Energy and Environment Services.
Bread, cereals and pasta: + 4.2% in one year
In 2017, bread and cereals accounted for 10% of grocery spending in supermarkets.
- Grain is one of the commodities whose prices have risen the most. In question, a series of bad circumstances, starting with the conflict between two of the most important exporting countries of the planet, Ukraine and Russia.
- Their prices are based on the price of agricultural commodities traded worldwide, depending on crops, economic prospects, geopolitical conditions and speculative investments.
- Droughts and heatwaves can devastate crops, as was the case in Canada in 2021. However, global stocks are low, threatening the food security of many countries.
- Rising grain prices are pushing up other starchy foods used as staples, such as rice and pasta.
🌾 Grain, an increasingly expensive raw material
Russia is the world’s largest exporter of soft wheat and Ukraine is the fifth largest. Together they represent almost a third of world trade in barley and Ukraine a sixth in corn. But the Black Sea lockdown has weighed on exports. “The conflict has a direct impact on the available grain supply and thus on prices,” confirms the French industry association Intercereals. A ton of wheat pulverized its historical level on May 16 at 438 euros. This increase has had an impact on grain processing players, who have also seen their production costs soar with the explosion in energy prices, which are vital to the sector.
At the climatic level, the prospects are not encouraging either, with droughts threatening harvests. India already embargoed wheat exports after a scorching early spring to ensure food security, adding to already high tensions in the market. “We’re not going to lie to each other, stocks are falling everywhere. It is clear that there is a risk of famine in certain countries,” warns Jérôme Foucault, citing in particular the Maghreb, which is very dependent on Russia.
Also read War in Ukraine: Rising grain prices shake French farmers
🥖 Flour and bread, pennies and large percentages
Even if they are supplied exclusively with French wheat, the association of French millers recalls that millers buy wheat at the world market price “and therefore suffer from these price increases”. Flour increased by 9.3% in one year: The 1-kilogram pack of Francine liquid flour increased by 15.8% in five months to EUR 1.10.
Some foods are directly affected, such as bread (+4% in one year). Flour accounts for only about 15% of the total cost of a baguette, but it comes on top of other escalating expenses like energy (for ovens), fuel (shipping), and packaging (paper). The baguette could exceed one euro. “In twenty years, the price of a baguette has only increased by an average of 23 cents,” says Dominique Anract, president of the National Confederation of French Bakery and Confectionery. “If there is a price increase, it’s a few cents and the baguette remains affordable. »
Also read The average price of a baguette could quickly exceed the one euro mark
🍝 Pasta in trouble since Canada heatwave
Barilla’s one-kilo pack of spaghetti, which cost €1.53 on January 1, has made 30 cents in five months. Pasta and couscous experienced an average annual inflation of 12.1%. This significant increase is not directly related to the Ukraine conflict, since neither Russia nor Ukraine produces durum wheat, but to a climatic episode. “Canada accounts for more than 70% of world trade in this material,” explains the French Pasta Manufacturers Association. However, Canada’s 2021 harvest was disastrous after the summer 2021 heat dome, which is expected to reduce the country’s exports by 60% in 2022.
🍚 Rice, collateral victim of wheat instability
Rice, the price of which traditionally does not depend on the price of other grains, has increased by 3.5% since September 2021. “When the price of a grain goes up, it’s a cascading phenomenon. When the price of wheat increases too much, operators switch grains and try to use others like corn or rice,” explains Bertrand Mazel, President of the Union of European Rice Producers.
Added to this are the poor rice harvests in Spain and Italy, the two largest European producers. Despite this, prices remain fairly stable as less than 10% of world production is sold on the international market. Public subsidies for producers help to avoid shifting the bill to consumers.
Sugar: + 5.3% in one year
In 2017, sugar and desserts accounted for 7% of grocery spending in supermarkets.
Oils: +9.4% in one year
- The highest tensions in the agri-food sector concern oils: +5.43% for olive oil and +15.54% for other cooking oils.
- The rise in sunflower oil has become a symbol of food inflation in recent weeks.
You have 50.95% of this article left to read. The following is for subscribers only.