Analyst: worldwide, consumers paying more for food, clothing, energy

LONDON, England: This year, consumers around the world will pay more for groceries than they did in 2022, unless commodity costs decrease or they shift to less expensive store-brand products.

Since the start of COVID-19-related supply chain issues in 2021 and Russia’s invasion of Ukraine in 2022, retailers and consumer goods producers have been involved in price negotiations, and are now fighting over the high cost of raw materials and energy, causing the prices of basic foodstuffs such as bread, milk and meat to rise and creating a cost-of-living crisis in Europe.

According to research analysis firm Kantar Group, in the four weeks to 22nd January people in the UK paid a record 16.7 percent more for food, compared to the same period in 2022.

For the year ending in December, the US food index, including meals eaten at home and in cafes and restaurants, increased by 10.4 percent.

Last week, Mark Schneider, CEO of Nestle, the world’s largest food group, told a German newspaper that the company is raising food prices this year to offset higher production costs that have yet to be fully passed on to consumers.

"Investors will pay a premium for companies that exhibit pricing power in their portfolio, without adversely impacting volumes and market share," noted Jack Martin, fund manager at Oberon Investments, as quoted by Reuters.

Consumer goods manufacturers will continue to raise prices until they recover their profitability, Bernstein analyst Bruno Monteyne stressed, stating, "The only thing that can stop this is consumers starting to trade down to private-label products at a more rapid pace, and if commodities keep declining, then there may be no need for more price increases," he said, as reported by Reuters.

In December, Doug McMillon, CEO of Walmart, the world’s largest retailer, warned that some "packaged goods suppliers are still pointing us towards more inflation next year, on top of the mid-double digits this year."

Meanwhile, Barclays analyst Warren Ackerman said that while average food commodity prices were 20 percent lower than their peak in March, it will take time for companies to reflect this in their costs.