Shoppers will pay even more for goods and groceries in 2023, according to retailers
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
For over a year now, the cost of everything has been on the rise, which has been a nightmare for shoppers, who were able to buy less and less for the same amount of money each time when they went to the store. The bad news is that shoppers around the world will continue to see an increase in the prices of goods and groceries in 2023 — potentially even greater one than last year, according to consumer goods firms, retailers, and investors.
The only way for this to be avoided is for the commodity costs to decline or if the shift to cheaper store-brand products picks up.
Price increases started over a year ago when COVID-19 disrupted supply chains and caused logjams all over the world. Since then, the Ukraine war, other political tensions, inflation, as well as the deteriorating global economy only contributed to the surging prices while retailers and consumer goods producers ended up stuck in price negotiations.
The cost of raw materials has gone up, and so did the price of energy, especially after Russia’s invasion of Ukraine. As a result, even the basic foodstuffs, from bread to milk, meat, and more, has gone up, drastically increasing the cost of living in Europe to the point where it became an actual crisis.
The price of food and other products will continue to surge
According to some data, Britons paid 16.7% more for food in the four weeks leading up to January 22nd than during the same period last year. The US food index, which includes meals eaten both in restaurants/cafes and at home, went up by 10.4% for 2022.
These are only a few examples, but the situation is not much better elsewhere either. Meanwhile, Mark Schneider, the CEO of Nestle — the world’s largest food group — stated recently that the prices of food products would have to go up even further in 2023 to offset higher production costs. The increase has not yet reached the consumers, but it will in time. Oberon Investments’ fund manager, Jack Martin, also said that investors would pay a premium for firms that exhibit pricing power in their portfolios without adversely impacting volumes and market share.
Other experts and executives of various food firms have shared the same predictions, noting that consumer goods manufacturers will have to keep raising prices until they recover the profitability of producing the food and other products. The only two ways for this to stop is for consumers to start to trade down and use private-label products more rapidly or for the price of commodities to decline to the point where price hikes would no longer be necessary.
