Consumers are spending more money on groceries this year. But not everything in the supermarket is becoming more expensive, experts say. Basic items in particular, such as coffee and bread, are becoming cheaper.
First the hard message. “No, prices are not going down,” says Sebastiaan Schreijen, consumer food specialist at Rabobank. “In fact, inflation is even rising somewhat. This is partly due to the consumption tax on sugary drinks, which has increased. On average, prices continue to rise in January compared to December.” Rabobank thinks that grocery prices in 2024 will be 1 to 2 percent higher than in 2023.
Then the good news. There are indeed items that are becoming cheaper: products for which the raw material price constitutes a significant part of the costs. “Everything that has to do with dairy. You saw the milk price for farmers drop significantly last year and ultimately, with some delay, this also translates into lower dairy prices on the shelf,” Schreijen explains. “Not just milk, but also yoghurt and cream, for example.” The price of coffee is also falling.
Food economist Thijs Geijer from ING also mentions dairy as an example. Although he does not think that prices will drop much further in the coming months. “Over the past month, the prices that FrieslandCampina, for example, pays to farmers, have been rising again. It could mean that things in the store will drop for a while, because there will be some delays.” Products that he believes will become cheaper: “Certain groceries, breakfast cereals, oatmeal, toast, filter coffee and sunflower oil.”
Basket
What is also becoming cheaper: the groceries that consumers regularly put in their basket or for which they know approximately what they should cost. “Bread,” says Schreijen. “I see the price slowly coming down in recent months.” And that is no coincidence. “Supermarkets look at this very explicitly: if I do something there, the consumer sees that I am doing it.” For a jar of mayonnaise, which is purchased much less often, many people do not notice a higher or lower price.
Supermarket chain Jumbo, whose average store has more than 16,000 items in its range, reduced the price of more than 1,500 products in the autumn. “Mainly basic messages that people often need,” says a spokesperson. He points to bread, Dors’ own beer and the Tessa apple, which is only sold at Jumbo.
Crying about the strategy behind it. “If you bring people in or keep them inside, you hope that they will also throw the more luxurious items into the basket.”
Market share
In addition, Jumbo is trying to differentiate itself from market leader Albert Heijn through price reductions. The formula from Veghel saw its market share decline last year, while Albert Heijn strengthened its position.
Jumbo says it will again reduce the price of ‘many items’ in 2024. “Including in the product categories fish, soup, butter/margarines, bread spreads and chocolate.” There will not be a price war in the supermarket world, says Schreijen. “Margins are under considerable pressure. This also applies to many producers.”
Albert Heijn sticks to a general response: “Albert Heijn wants to make healthy and affordable food accessible to everyone. We therefore keep a close eye on prices and work hard to keep them as low as possible.”
Product Range
The little ones are also taken care of in the non-food sector. Ikea Netherlands announced on Saturday that it is lowering the prices of 2,700 products, more than a quarter of its range. In September, 600 items already became cheaper. Prices drop by an average of 20 percent. Since the summer, Action has made about 15 percent of its items cheaper, some of which by more than 10 percent. “About 40 percent of our products have now been reduced in price,” says a spokeswoman.
But there you are mentioning two giants, says retail & wholesale sector manager Peter van Heerde of Rabobank. “They can generally sail closer to the wind because they have that financial buffer, often due to their scale.” According to him, smaller retailers do not have that space, because operating costs have risen sharply and will continue to rise in 2024. Van Heerde points to, among other things, personnel costs.
Furniture stores
“The price of furniture has been falling for some time and appears to be falling further,” says retail & leisure sector economist Gerarda Westerhuis of ABN Amro. According to her, this is partly because wood has become cheaper. Two years ago, furniture stores increased prices considerably: there was a lot of demand, but little supply due to delivery problems. Price increases were necessary and possible.
Demand has now fallen sharply, just like in many other industries. “Decreasing demand limits the scope for further price increases. We see that again: prices stabilize or even fall.”