In recent years the inflation seemed to subside on the charts, but not where millions of homes feel it: the supermarket. Under this appearance of normality, a silent and structural shift has been taking place that does not hit everyone equally: because what increases the most is not luxury, but the essentials, and it is paid for by those who cannot stop buying it.
One word sums it up and explains it perfectly.
Cheapflation. I remembered this morning the newspaper El País that food inflation has not been neutral: it hits harder the less you have. Thus, the so-called cheapflation (the disproportionate increase in the cost of the cheapest products) has raised the price of basic foods by 37% between 2021 and 2024, compared to 23% for high-end foods.
The result: the poor households spend more proportion of their income in essential goods, and when they try to lower their basket by replacing commercial brands with white brands or smaller formats, they discover that these ranges are precisely the ones that have increased the most. The burden is not only economic: the qualitative degradation of the diet in households with financial stress has an impact on health, and in Spain the ECB indicators show a gap “exceptional and persistent” between food and the rest of the prices from 2022, consolidating a structural, not cyclical, shock.
Pandemic, energy neck and Ukraine. The sequence that triggered cheapflation is recognizable: the exit from confinements with the demand running ahead of the offer, the later energy escalation and logistics, and that war in Ukraine that has only been stress fertilizerscereals and fuels.
The ECB estimates a +30% accumulated in food in the eurozone since 2019, and in Spain, groceries have risen more than 30% from 2021 (compared to 19% of the general CPI), with essentials such as meat, milk, butter between +30% and +50%and extreme peaks in olive oil, coffee or cocoa, with increases up to 80%.
The hidden layer. The increase in food is not explained only by wars or general inflation, but by how it is organized the market itself. Since the 2008 crisis, basic foodstuffs have been traded as a financial product on futures exchanges, which allows for speculative movements that push up prices.
Account the investigation from the Barcelona Urban Research Institute (IDRA) that at the same time the world cereal trade is in the hands of only five large companies that control between 70% and 90% of the market and they also participate on both sides: in the physical grain and in the financial business linked to that grain. Between 2021 and 2022 they obtained record profits, some multiplied by three on previous levels. That combination (few hands managing the product and the price) means that any global shock translates into higher prices faster and with more strength.
Spain as a laboratory. According to the same report from the Barcelona Institute, in Spain, both manufacturers and distributors captured extraordinary margins in inflationary phase: agri-food leads the rise in margins with +38.1% since 2020; The large distribution groups declared record profits (7.5 billion in 2024), while salaries in the sector are below average and pockets of precariousness persist, such as in fruit in Lleida and Andalusia.
The contrast in this sense is clear: income moves from consumers and labor to capital concentrated in an oligopolistic market whose pricing power has not been contested.
Non-intervention policy. The report also pointed out that when the market is left to resolve itself, the same thing almost always happens: the hard of the cost remains in families (worse and more expensive food, more deprivation, more inequality) and the extraordinary benefits remain above. Spain is already the third country in Europe where the food deprivation in 15 yearsonly behind France and Greece, and mainly affects single-parent households, dependent people and precarious jobs.
Although from 2023 costs went down energy and logistics, the final prices have not. When a price “jumps” due to a crisis, if there are few companies dominating the market, that jump becomes the new floor and there is no going back.
Regulation of power. The studies agree in which the problem is not solved only with specific aid, but by changing how the market works. That means reduce concentration of power in a few companies, stop financial speculation with food and be able to put temporary caps on prices when there is a crisis to prevent them from staying at the top forever.
According to the documentit is not useful to give money to the consumer (because the State pays it) or to demand discounts from the farmer (who is already the weakest link), the adjustment has to come of the middle part of the chain, where the highest margins are (industry and distribution), and with an active role of the State to monitor that price power.
The ultimate goal is not only for food to cost less, but for essentials to stop depending on financial fluctuations and the control of a few companies that today they dominate the grain on which food security depends.
Image | H. Friar
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