🍝🧀🥔 Eh, Why Grindz Stay So Mahke In Europe?😲🍞
So, da basic kine food, you know da white bread one?😋🍞🇬🇧 In England, da price stay high like one tall coconut tree – 28 percent high from last year, to be exact. Now, da bread cost 1.39 pounds, or $1.72. Da price stay like one sticky mango, it no like come down.🙄💸
Italy no diff’rent. Da price of da spaghetti and odda pasta – da one everybody like eat – wen rise by almost 17 percent from last year.🍝🇮🇹 And Germany, da big kahuna economy of da European Union, get cheese prices wea like 40 percent more than before. Da potatoes no stay behind, cost 14 percent more.🧀🇩🇪🥔
All ova da European Union, da price of da grindz wen go up by 17 percent. Dis still less from da previous month, wea had da fastest price increase in ova twenty-five years. Da scene stay worse in England than da odda Western European places. Da price of da food and non-alcoholic drinks stay 19 percent more. Na US food inflation stay at 7.7 percent, like one baby compared to Europe.😣💸🌍
But how come da price stay so high? Da big costs wea go into making da food – like fuel, wheat, and odda farm products – wen fall in da world markets for most of da last year.🌾🚜⛽ So, why da food stay so expensive in Europe? With da wages going up and da chance of businesses getting greedy, da food prices not going come down anytime soon. If da prices keep rising, might make da central banks keep da interest rates high, and dat could hold back da economy.💰💹🏦
So, wat’s making da food price go up? When you look at da price tag for da bread, you see not only da costs for da main ingredients but also for da processing, packaging, transport, wages, storage, and even company markups.🍞💼🚚💰📦
A United Nations index of world food prices, like wheat, meat, and vegetable oil, hit da roof in March 2022, right after Russia invaded Ukraine, one of da biggest grain producers. Da war disrupted da grain and oil production in da area, and even had impact all ova da world, making da food crisis in parts of East Africa and da Middle East worse.🌾🛢️🌍🌍🌽
But, no was all bad, in part because of a deal to export grain from Ukraine. Da prices of European wheat wen go down by about 40 percent since last May. Da world vegetable oil prices are also down by about 50 percent. But still get plenny to do: da United Nations’ food price index was 34 percent more in April than its 2019 average.🍞🌾📉🌍
And den, da prices for things wea part of da food supply chain wen go up sky high in Europe. Energy prices wen shoot up because da war made Europe replace Russian gas with new supplies, making da cost of food production, transport, and storage go up. Even though da wholesale energy prices wen go down recently, da shops say get long time – maybe up to a year – before da customers can see da benefits of dat, because da energy contracts were made months before, most likely showing da higher prices. And because there’s not enough workers in Europe and plenty jobs available, da employers, including food companies, gotta raise wages to get workers. Dis makes da cost for businesses, including in da food sector, go up.⛽🚚💡💰📈👨🌾
Da big question stay: Is businesses being greedy keeping prices high? More people starting to tink dat inflation could be kept high on purpose by companies raising prices more than their costs to keep their profits. Da European Central Bank said dat at da end of last year, company profits were contributing to da inflation as much as wage growth, but it never say if any industries were making too much profit. Allianz, da German insurance and asset management company, estimate dat 10 to 20 percent of food inflation in Europe can be attributed to businesses being greedy. But, not enough information about company profits and supply chains is causing disagreements in economic opinions.
Some economists and food shops blame da big world food producers, wea have been making double-digit profit margins while raising prices. In April, da Swiss giant Nestlé said it expects its profit margin this year to be about da same as last year, about 17 percent, while it reported raising prices almost 10 percent in da first quarter. Even with costs like transport and accounting for pricing lags from farms to shelves, people like Ludovic Subran from Allianz, would have expected food inflation to come down by now.
But, in England, some economists are telling a different story. Michael Saunders, an economist at Oxford Economics and former rate-setter at the Bank of England, said in a note to clients in May that “greedflation” was not the culprit. Most of the increase in inflation reflects the higher cost of energy and other commodities, he said. Instead of going up, total profits for nonfinancial companies in England, excluding the oil and gas industry, have gone down over the past year, he said.
England’s competition regulator also said that it hadn’t seen evidence of competition concerns in the grocery sector, but that it was stepping up its investigation into “cost of living pressures.”
Despite well-publicized cuts to milk prices in Britain, food prices in general are unlikely to go down in the near future. Instead, policymakers are closely watching for a slowdown in the rate of increases. There are tentative signs that the pace of food inflation — the double-digit increase in annual prices — has reached its pinnacle. In April, the rate fell in the European Union for the first time in two years. But the slowdown from here is likely to be gradual.
Across the continent, some governments are intervening by capping prices on food essentials, rather than waiting for the economic debates about corporate profiteering to play out. In France, the government is pushing an “anti-inflation quarter,” asking food retailers to cut prices on some products until June. But the finance minister, Bruno Le Maire, said this month that he wanted food producers to contribute more to the effort, warning they could face tax penalties to recover any margins unfairly made at the expense of consumers if they refuse to return to negotiations.
These efforts may help some shoppers, but on the whole there is little to comfort Europeans. Food prices are unlikely to decline — it’s likely only that the pace of increases will slow later this year. 🇪🇺💸🛒🍏🥬🥖🍗🧀🥔
NOW IN ENGLISH
🍝🧀🥔 What’s Up With the Sky-High Food Prices in Europe?😲🍞
Let’s talk about that simple, everyday staple: white bread.😋🍞🇬🇧 In Britain, the average price of a loaf has soared, up by a staggering 28 percent from last year. Now, it’s pegged at 1.39 pounds, or $1.72. That’s a price tag that’s seemingly stuck to the roof.🙄💸
It’s the same story in Italy. The cost of spaghetti and other pasta – a mainstay of the Italian diet – has inflated by around 17 percent from last year.🍝🇮🇹 And in Germany, the leading economy in the European Union, cheese prices have ballooned almost 40 percent compared to a year ago. Even the price of potatoes hasn’t escaped, increasing by 14 percent.🧀🇩🇪🥔
Across the entire European Union, the average food price has escalated by roughly 17 percent. This may be a slight slowdown from the previous month, which saw the most rapid rate of growth in over two and a half decades, but it’s still a tough pill to swallow. In Britain, the situation is particularly sour, with food and non-alcoholic drink prices being 19 percent higher, marking the fastest annual food inflation rate in more than 45 years. In contrast, the US food inflation rate stands at a more modest 7.7 percent.😣💸🌍
The question on everyone’s lips, though, is why are these prices so steep? The major costs associated with producing food, such as fuel, wheat, and other agricultural commodities, have been on a downward trend in global markets for the bulk of the past year. So, why are food prices for consumers in Europe remaining so high? With rising labor costs and the potential for price gouging, it’s unlikely that food prices will drop anytime soon. Furthermore, these climbing prices could pressure central banks to keep interest rates high, potentially inhibiting economic growth.💰💹🏦
So, what’s pushing food prices upward? The price tag on a loaf of bread isn’t just covering the cost of key ingredients. It also includes processing, packaging, transport, wages, storage, and company markups.🍞💼🚚💰📦
A United Nations index of global food commodity prices – including staples like wheat, meat, and vegetable oil – hit an all-time high in March 2022, right after Russia’s invasion of Ukraine, one of the world’s largest grain producers. The war disrupted grain and oil production in the region and also had a worldwide impact, exacerbating food crises in parts of East Africa and the Middle East.🌾🛢️🌍🌽
However, it wasn’t a total catastrophe, largely thanks to a deal to export grain from Ukraine. European wheat prices have decreased by about 40 percent since last May, while global vegetable oil prices are down by roughly 50 percent. But there’s still a long way to go: The United Nations’ food price index was 34 percent higher in April than its 2019 average.🍞🌾📉🌍
Beyond the prices of commodities, Europe has been grappling with particularly severe increases in costs along the food supply chain. Energy prices rocketed as the war forced Europe to quickly replace Russian gas with new supplies, causing the costs of food production, transport, and storage to surge.
While wholesale energy prices have recently dipped, retailers warn that there will be a substantial delay – perhaps up to a year – before consumers can reap the benefits, given that energy contracts were agreed upon months ago, most likely reflecting the higher prices. Furthermore, Europe’s tight labor market, characterized by a high job vacancy rate and low unemployment, is compelling employers, including food companies, to increase wages to attract workers, further driving up costs.⛽🚚💡💰📈👷♀️
There’s growing suspicion among consumers, trade unions, and some economists that inflation could be kept artificially high by companies raising prices above their costs to safeguard profit margins. At the end of last year, corporate profits were contributing to domestic inflation as much as wage growth, according to the European Central Bank. However, they didn’t indicate whether any industries had made excessive profits. Economists at Allianz, the German insurer and asset manager, estimate that 10 to 20 percent of food inflation in Europe can be attributed to such profiteering.🤨💼💰📈
There’s a discrepancy in economic opinions, largely due to a lack of detailed data on corporate profits and supply chains. Some economists and food retailers are pointing fingers at large global food producers, who have maintained double-digit profit margins while increasing prices. For instance, in April, Swiss giant Nestlé stated that they expect their profit margin this year to be approximately the same as last year, around 17 percent, despite having raised prices nearly 10 percent in the first quarter.
Even after accounting for expenses such as transport and the delay in pricing from farms to shelves, it’s expected that food inflation should have started to decrease by now. In Britain, some economists tell a different story, arguing that most of the inflation is due to higher costs of energy and other commodities, not corporate greed. In fact, total profits for non-financial companies in Britain, excluding the oil and gas industry, have declined over the past year. Britain’s competition regulator also stated that it hasn’t found evidence of competition concerns in the grocery sector, but it is ramping up its investigation into “cost of living pressures.”⚡🌽🚚💰🇬🇧
Despite publicized cuts to milk prices in Britain, it’s unlikely that food prices will decrease in the near future. Policymakers are instead closely monitoring for a slowdown in the rate of increase. There are signs that the rate of food inflation has reached its peak, and in April, the rate fell in the European Union for the first time in two years. However, any subsequent slowdown is likely to be gradual.🥛💷💹🌍
Across the continent, some governments are intervening by setting price caps on essential food items, rather than waiting for debates about corporate profiteering to conclude. In France, the government is advocating for an “anti-inflation quarter,” requesting food retailers to reduce prices on some items until June. However, the finance minister wants food producers to contribute more to this effort, warning of potential tax penalties if they refuse to negotiate.🇫🇷🍏🥬🥖🍗🧀
While these initiatives may provide some relief for shoppers, there’s little solace for Europeans as a whole. Food prices aren’t expected to decrease – it’s more likely that the pace of increases will simply slow later this year.🛒💸🇪🇺🤷♂️
