Germans are shopping differently to save money as prices continue to rise. Inflation now appears to have peaked. So will customers be coming back anytime soon?
Six o’clock at the Pappelhof in Hessian Wetterau: bright red strawberries are finally crated, green asparagus is cut open. Both will reach the customer in an “organic box” on the same day. Organic and Regional – Querbeet has grown with these two megatrends over the past 30 years, selling more and more items in weekly markets and delivery services.
But now it’s all over, says company founder Thomas Wolff: “During the Corona boom, we were able to employ 30 employees. At the same time, unfortunately, we had to lay off new employees.” It also saves money when going up. For one thing, fewer customers are ordering organic boxes. And those who still subscribed bought fewer products.
Spend less on organic food
The Hesse company thus represents an entire industry that has been on the rise for decades: Germans spent 2.1 billion euros on organic food in 2000, with sales rising to 15.9 billion euros as the corona boom took hold. But last year it fell for the first time to 15.3 billion euros, according to Agrarmarkt Informations-Gesellschaft (AMI).
At the same time, customers are increasingly forgoing more expensive organic produce from regional suppliers in favor of cheaper organic produce at supermarkets and discounters. Food retailers were able to slightly increase their organic business (+3.2%). However, this is at the expense of the organic food trade (-12.3%).
Losses for market traders and yard sales
Other providers, such as weekly markets, produce sales and mail-order businesses, were hit harder, down 18.2%. Is this the end of Germany’s decades-long organic boom? No, says Andreas Riekötter of market research agency IFH Media Analytics in Cologne: “When you have more money in your pocket, because inflation is falling, there is definitely more focus on sustainability and greater consumption of sustainably produced goods. invest more”
Both the organic industry and consumers have good reason to want the price increases to end. “The peak of the consumer price index, the highest rate of inflation, is probably already behind us,” said Professor Volker Wieland, an economist at Goethe University in Frankfurt am Main.
prices rise more slowly
In May, inflation was estimated at 6.1%, almost breaking the 10% mark in previous months. Furthermore, the latest statistics show that prices will continue to rise slowly in the coming months.
Because the increase in producer prices has dropped significantly. This then delays the store’s prices. “Of course, nobody wants to pass on cost cuts at first,” explains Wieland, an economics expert. “But competitive pressure will ensure prices fall.”
ECB Cautiously Optimistic
The European Central Bank (ECB) in Frankfurt is therefore cautiously optimistic. “Overall, we are very pleased with what we have achieved so far,” Christiane Nickel, the ECB’s deputy director for economics, said of the shift in rates. “But inflation is still too high. So we’re not all off the alarm yet.”
Therefore, ECB watchers assume that the next rate hike will be at the next ECB Governing Council meeting on Thursday, June 15. Because the ECB is still a long way from achieving its goal of price stability. For this to happen, the inflation rate must drop to two percent.
The outlook for consumers is good: If prices stop rising so sharply, they won’t have to cut as much. After the dent, more regional organic produce can enter the shopping basket again.