In February, prices in stores were on average 3.9% higher than a year ago. This is according to an analysis of nearly 60,000 retail prices. Ten out of the 17 monitored categories showed single-digit increases, whilst two product groups registered double-digit price jumps. Meanwhile, five categories recorded price drops. Currently, the leader in price increases are food additives, such as ketchup, mayonnaise, mustards and spices, with prices higher by 12.1% compared to last year. Following them are sweets and desserts, which increased by 10.5%. Household chemicals also feature in the top three, with a price increase of 9.4%. On the other hand, the most significant price reductions were seen for fatty food products – down by 16.7%. Also showing decreases were tobacco products, dairy and fruit.
February was another month characterised by a gradually decelerating rate of price increases for the most frequently purchased food and chemical products. Daily shopping was on average 3.9% more expensive year on year(yoy) (following yoy increases of 4.9% in January and 5.6% in December). This is according to a cyclical report titled, “RETAIL PRICE INDEX”, co-authored by UCE RESEARCH and WSB Merito Universities. The study covers 17 categories and 100 goods. This time, nearly 60,000 prices from almost 28,000 stores belonging to 55 retail networks were compared.
“The increase in the number of categories whose prices are rising at a single-digit rate is associated with observed price stabilisation. It also corresponds to the forecast scenario for 2024. It had been anticipated that this year inflation would significantly slow down, and the rise in store prices would oscillate on an average level from 3% to 5%” says Dr Anna Semmerling from WSB Merito University in Gdańsk.
The study also shows that in February, out of the seventeen monitored categories, ten showed single-digit price increases yoy. In January, there were eight. Additionally, this time only two product groups registered double-digit price jumps, whilst in the previous month there were as many as five. Furthermore, the report revealed that in February five categories were cheaper than a year ago, compared with four in the previous month.
“The fact that most categories showed a single-digit price increase, is directly linked to the falling inflation trend and the stabilisation of some factors causing large increases,” notes Dr Artur Fiks from WSB Merito University in Warsaw. “We must take into account the fact that some categories will still maintain a relatively high level of price increases, but the times of double-digit percentage increases for the majority of categories are clearly behind us,” adds the expert.
The report also states that in February, the new leader in price increases was the category of food additives, including ketchup, mayonnaise, mustards and spices. In this case, the price increase was 12.1% yoy. In January, the yoy increase was at 12.8%, placing the category in third position among the fastest growing categories. Price growth dynamics are slightly weakening, but food additives still remain among the top categories with the highest price increases.
“This is quite a specific category. Its demand is partially seasonal, and additionally holiday periods contribute to increased interest in it. The constant high level of price increases during the winter period year on year may indicate that manufacturers do not feel market pressure to reduce the pace of increases and demand is satisfying for them,” adds the expert from WSB Merito Warsaw.
Sweets and desserts, with a price increase of 10.5% yoy, were second in the ranking of the most expensive items. This category maintained its strong position near the top for the second month in a row. Previous price increases were 14.3% yoy. “The high dynamics of price increases for sweets can be linked to significantly more expensive raw material, which is cocoa. Lower sugar prices, just like changes in currency markets, are currently unable to neutralise this effect. Price increases in this category are additionally supported by strongly rising wage costs,” comments Dr Mariusz Dziwulski from the Department of Economic Analysis and the Sectoral Analysis Team at PKO BP.
Household chemicals took third place in the rankings, with an average price increase of 9.4% yoy. In January, they became more expensive by 10.9% yoy. Now, non-alcoholic beverages are in fourth position, with a price increase of 8.7% yoy. The month prior they became more expensive by 13.8% yoy. Personal hygiene products conclude the TOP 5, with a price increase of 8.4% yoy. Previously they recorded a much lesser increase, at 2.7% yoy. “January’s after Christmas and New Year’s discounts meant that personal hygiene products were much cheaper than usual. In February, these promotions ended, resulting in a significant increase in prices. Additionally, this category is characterised by high production costs,” explains the expert from WSB Merito Warsaw.
Just after the TOP5 are children’s products with an average yoy increase of 6.5%. They became less expensive than in January – then by 7.1% yoy. Vegetables are next in the classification – up by 4.4% yoy, with their prices previously going up by 10.5% yoy. “Price changes for vegetables at the beginning of the year are mainly due to the level of crops in the previous year, the rate of liquidation of reserves and the seasonality of production. The decrease in the rate of vegetable price increases in February is mainly due to lower demand than expected. Besides, price seasonality assumes a significantly slower rate of increase in the first quarter of the year than usual,” explains Jakub Jakubczak, a Food and Agri Sector analyst at BNP Paribas Bank.
The expert also emphasises that the price trend we are observing is not an exception to the rule. “However, it has been additionally reinforced by lower crops last year. In 2023, virtually every product in this category recorded a production decline of an average of 3-5% compared to 2022,” points out Jakub Jakubczak.
In further positions are animal feeds – up by 2.9% yoy. Small price increases yoy have been also recorded for categories such as fish, meat and sausages – respectively by 2.7%, 2.5% and 1.7%. “Meat is becoming more expensive at a slower pace and this trend is likely to continue in the coming few months. If it was not for the abolition of zero VAT on food at the end of March, we could expect even a slight deflation in this category in the near future,” Dr Mariusz Dziwulski is convinced.
UCE RESEARCH analysts draw attention to the categories which became cheaper in February yoy. Fruit prices slightly decreased yoy by 0.1%, dairy by 0.4% and tobacco products by 1.4%. The largest decrease was registered for fatty food products – down by as much as 16.7% yoy. As Dr Anna Semmerling points out, in the case of dairy, there are no signs that would suggest a price increase should be expected in the near future. Similarly, as in the other categories mentioned above, stabilization should rather be expected.
“Fatty food products were a hit in terms of price increases at the time of high inflation. At that time, experts constantly emphasized that the reported increases were not only the result of external factors, but of a certain policy of producers. The price drops that have been visible for some time now have two sources. The first one is a reduction in price compared to the previously inflated price. The second one is competition for customers. Stores noticed that promotions on fatty food products attract consumers. Therefore, price decreases for them have become an important part of promotional campaigns,” summarises the expert from WSB Merito Gdańsk.
