Markets experienced a hike in food prices of 18%* in 2022. Inflation combined with energy price hikes impacted by the war in Ukraine are hitting consumer spend. Low to middle income countries have been most affected with some experiencing a rise of up to 52%. In developed markets, the EU and UK have been hit harder by food inflation than the US.
While spending on food and drink is still a key source of pleasure against other uses of discretionary spend, a recent Consumer Insider report from Innova Market Insights on Food Inflation highlights the potential consumer impact. It shows consumers spending more on food generally, but this isn’t solely attributed to price hikes. Rather, it includes spending on food as a route to mood enhancement, a return to restaurants and the rise of delivered-in post pandemic. National factors like the stockpiling of food in the event of an emergency are also a consideration in some markets such as Germany.
Challenges and choices
Actions to reduce spend look set to increase with 2 in 5 consumers expecting to spend less in 2023. Favored economizing methods include looking for price cuts, buying on promotion or buying fewer items. Cooking from scratch is still a cost saving measure for a few age groups and more widely in markets such as China and India.
The report notes that we could see popular trends over the last couple of years, such as a desire for ‘fresh’ and ‘local’, challenged as consumers look for savings in their weekly grocery shops. There is also an indication that younger people could cut back on indulgences like convenience foods or foods which provide a bit of a taste adventure.
For more information on how food price hikes are affecting consumer behavior contact Innova at contact@innovami.com or for information on how to access the latest Consumer Insider Report ‘Food Inflation Consumer Impact, an Update Dec 2022.
*World Bank
