The analysis of over 68.4 thousand retail prices showed that in May this year, everyday shopping in stores increased by an average of 2.9% year-on-year. The results of the last three months clearly show that the trend of accelerating price increases has returned. Furthermore, this time more categories than in April or March showed single-digit year-on-year growth – twelve out of seventeen monitored. Additionally, one product group experienced a double-digit year-on-year increase. The highest increase was in the prices of sweets and desserts, which rose by 12.9% year-on-year. The TOP5 list of price hikes also includes household chemicals with a year-on-year increase of 9.7%, non-alcoholic beverages – 6.3%, food additives – 5.9%, and bread – 4.9% year-on-year. The data also shows that the return of VAT on food has become a reality.
According to the report titled “RETAIL PRICE INDEX,” conducted cyclically for nearly seven years by UCE RESEARCH and WSB Merito Universities, in May this year, everyday shopping increased by an average of 2.9% year-on-year. This is a higher increase than in April – at the level of 2.4% year-on-year. For comparison, in March this year, the prices of the most frequently purchased products rose by 2.1% year-on-year.
“The results of the last three months indicate a trend change – from slowing down to accelerating price growth dynamics in retail stores. There are many reasons for this situation. On the one hand, rising production costs and wages, and on the other hand, disruptions in supply chains and seasonal fluctuations. Unfavorable forecasts also play a role. When the market believes that the costs of running a business will continue to rise, retailers may increase prices to hedge against their rise,” comments Dr. Joanna Wieprow from WSB Merito University.
Analysts from UCE RESEARCH remind that among retailers, there is talk that due to price competition among discount stores, prices will return to their proper state more slowly in the coming months after the unfreezing of VAT on food. However, their increase by the tax rate is inevitable.
“The slower price growth is only partially due to the market competition. Another reason is the large import of lower-quality but cheaper food from Russia, Belarus, and Ukraine. Inflation will rise in the second half of the year. It is not yet known how much. If the current government does not restructure the state-owned strategic companies destroyed by the previous government, we may see a significant increase in inflation by the end of the year. There is also the question of how the NBP will behave. Previously, it implemented so-called empty money printing. Currently, we have the opposite trend, which slows inflation,” says Dr. hab. Sławomir Jankiewicz from WSB Merito University, Prof. UWSB Merito.
The report showed that in May this year, 12 out of the 17 monitored categories recorded single-digit year-on-year growth (in April – 10, and in March – 8). One product group saw a double-digit year-on-year increase (in April – 2, and in March – 1). The remaining categories recorded year-on-year declines.
“The increase in the number of categories with single-digit growth suggests that prices in most cases are stabilizing at moderate increases. This may indicate that they are leveling off after a period of greater fluctuations, and companies are adjusting to the new cost reality. On the other hand, only one double-digit increase means that extremely rapid price hikes may be indicating some stabilization in the most inflation-sensitive categories,” explains Dr. Wieprow.
In May, the front runners in price hikes were sweets and desserts with a 12.9% year-on-year increase. In April, they rose by 10.6% year-on-year, and in March – by 9.6%. “Increasing price hikes are the result of rising raw material costs. Unfortunately, problems with the supply of cocoa and sugar due to climate changes will not disappear. The unpredictability of the weather will continue to worsen yields and raise prices,” warns Dr. hab. Sławomir Jankiewicz.
Second on the list is household chemicals with an average year-on-year increase of 9.7%. In April, they rose by 7.7% year-on-year, and in March – by 9.7%. “The increase in prices is mainly due to raw materials such as crude oil, natural gas, and vegetable fats. This is partly due to the war in Ukraine, supply chain disruptions, and increasing demand from China,” enumerates Dr. Joanna Wieprow.
The third position in the ranking is occupied by non-alcoholic beverages, which rose by 6.3% year-on-year. In April, their prices increased by 8.1% year-on-year, and in March – by 9.1%. “The increase in the prices of sugar, water, fruits, and packaging is the main factor in the continuous hikes. Transport costs have also significantly increased due to rising fuel prices and fees. Additionally, the sugar tax introduced in 2021 has impacted the prices of non-alcoholic beverages. It is possible that consumers started buying fewer of these products due to their high prices, prompting producers to limit the hikes,” analyzes the expert from WSB Merito.
Fourth place goes to food additives (e.g., ketchup, mayonnaise, mustard, spices) with an average year-on-year increase of 5.9%. In April, they rose by 11.7% year-on-year, and in March – by 15.4%. “The dynamic of price hikes is clearly decreasing. However, it is important to note that we are calculating values from a higher amount. For example, an increase in price from 10 PLN to 11 PLN, which is 1 PLN, gives a 10% change. The next increase by 1 PLN to 12 PLN is a 9% increase. Raising prices by the same amount but from different bases results in a lower jump,” explains Dr. hab. Sławomir Jankiewicz.
The TOP5 list of price hikes is closed by bread, with prices rising by an average of 4.9% year-on-year. In April, this category saw a year-on-year increase of 1.4%, and in March – 3.9%. “The significance lies in the increase in VAT, raw material prices, energy carriers, and wages. The removal of protective shields for bakeries and the increase in gas and energy prices in the coming months will raise production costs,” emphasizes the expert.
Among the rising categories are also products for children, with an average year-on-year increase of 4.2%. In April, their prices rose by 5.5% year-on-year, and in March – by 4.2%. “The decrease in the dynamic of price hikes results from the stabilization of raw material prices such as plastic, cardboard, and cotton. Additionally, producers may have taken measures to limit price increases, for example, by lowering margins or changing packaging to cheaper options,” says Dr. Joanna Wieprow.
Further in the ranking are personal hygiene products with a year-on-year increase of 3.1%, and then stimulants (e.g., tea, coffee, beer, vodka) with a year-on-year increase of 2.6%. Year-on-year, fruit prices rose slightly – by 2.2%, meat – by 1.9%, cold cuts – by 1.2%, dairy – by 1%, and fish – by 0.5%.
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Description of the research method
The data comes from the cyclic report titled “RETAIL PRICE INDEX” (conducted monthly for nearly 7 years) by UCE RESEARCH and WSB Merito Universities (formerly Wyższe Szkoły Bankowe). The analysis shows the average price value recorded month-to-month and year-to-year. The latest edition compared the results from May 2024 with the same period in 2023. It concerned 17 categories and 100 of the most frequently chosen everyday consumer products. A total of over 68.4 thousand retail prices from more than 31.7 thousand stores belonging to 56 retail chains were compared. The study covered all discount stores, hypermarkets, supermarkets, convenience store chains, and cash & carry stores reaching most consumers in Poland.
