Even staple items are seeing significant price rises right now. The Russian invasion may cause the spiral to accelerate even worse.
Whether it's noodles, coffee, beer, or toilet paper, prices at supermarkets and discounters appear to be trending in only one direction right now: up. And the war in Ukraine should push up prices once more.
"The rise in energy prices and logistics costs caused by the Ukraine war will be felt in people's daily lives - with every purchase in the supermarket or discounter," predicted Boris Hedde, managing director of the Cologne Institute for Retail Research (IFH), in an interview with the German Press Agency.
Because prices would suddenly climb much faster than they did previously. "That will be difficult, especially for low-income families."
Hedde is not alone in his opinion. Retail analyst Robert Kecskes of market research firm GfK is equally convinced: "The disagreement will add to the pressure to raise prices." "There will very definitely be considerable inflation."
Stefan Genth, CEO of the German Retail Association (HDE), has cautioned that the conflict in Ukraine and the sanctions imposed as a result "may have a price-driving effect."
Prices in the German food sector were already in motion prior to the Ukraine war due to increased raw material and energy costs, as well as corona-related supply chain issues. Consumers had to spend 5.3 percent more in February than a year before, according to the Federal Statistical Office for Food.
Price hikes could be found everywhere: Tchibo raised the price of coffee. Rows of price increases were announced by large German brewers, as well as producers of toilet paper and handkerchiefs. Beef, chicken, and tomatoes all saw significant price increases.
"There have never been so many demands for price rises from industry as this year," Rewe CEO Lionel Souque lamented at the end of last year. And this was before to the Ukraine war. Meanwhile, the situation for many manufacturers is likely to have deteriorated substantially.
Because the war's worldwide increase in energy costs not only raises the cost of heating your own four walls and driving a car. Many things, from bread to detergent, are growing more expensive to produce. "Everyone deals with power and gas, even Nestlé and Unilever," one industry source noted.
In the case of beef, for example, energy expenses are included in the costs from seed production for animal feed through the full value chain to the shop freezer.
The sector is concerned that logistical costs would skyrocket as a result of the Russian invasion. "Manufacturers will almost likely try to pass on these higher costs to retailers and customers," Kecskes said.
It shouldn't be so simple for her. Because huge retail chains like Edeka, Rewe, Aldi, and Lidl are fully aware that pricing will play a significantly larger part in shopping in the coming months than it has in the past. Furthermore, they do not want to jeopardise their own competitive position by offering undue pricing concessions to manufacturers.
In recent months, price talks between dealers and manufacturers have been exceptionally difficult. There were several temporary delistings and delivery halts.
However, even trade resistance will not be enough to arrest the price spiral. According to industry analysts, the pressures of greater living costs, the prospect of back payments for heating expenditures, and increasing gasoline prices might dramatically influence German residents' buying habits in the coming months.
While during the corona epidemic, customers went to supermarkets in droves, and discounters lost market share, the pattern may soon be reversed. "The predicted price rises may affect purchasing behaviour and ensure that more consumers buy from discounters again, allowing them to reclaim lost market share," Hedde says.