Food costs: The lengthy farewell to a budget nation | EUROtoday

At 6:30 p.m., a household with whining kids traces up on the checkout within the low cost retailer. A younger couple places a sack of potatoes on the conveyor belt; the tubers are at the moment on sale. Behind them are males – generally in high quality wool coats, generally in worn work jackets. A younger lady locations three cans of corn and one thing from the bakery on the conveyor belt. Beep. 3.56 euros. A few dad and mom with two kids have the automobile full: a six-pack of water, a head of lettuce, six pizzas, meat and much more meals and drinks. Beep. Just beneath 75 euros. The man on the different checkout already has greater than 65 euros and the cart is barely half full.

Many clients right now in all probability go away the shop with the identical feeling: all the pieces has change into extremely costly.

At first look, the value dynamics have really calmed down not too long ago. In November 2025, general inflation was 2.3 %, meals costs have been only one.2 % above the identical month final 12 months; as little as they have been final at the start of 2025. At second look, nevertheless, the burden stays excessive: between December 2019 and November 2025, meals costs rose by 37.9 %. The favorable stage earlier than the pandemic is way away.

To the chagrin of many purchasers, as a result of the value will increase are additionally mirrored of their temper. This is proven by a present Forsa survey commissioned by client recommendation facilities: 58 % are apprehensive concerning the rising value of dwelling and the monetary state of affairs of their family. The largest challenge for almost all is the costs on the grocery shelf. An excellent two thirds of these surveyed within the consultant survey said that they have been feeling the best influence from the will increase in meals costs. For comparability: power prices, for instance for heating, have been talked about by solely 16 % of individuals, whereas for mobility (tickets and refueling) the determine was simply 4 %.

In one other survey by Forsa and the buyer recommendation heart, virtually half stated that they needed to restrict their buying in supermarkets and low cost shops as a result of elevated meals costs. Food costs have change into an on a regular basis concern for many individuals.

This was exactly what was unthinkable for the Federal Republic for a very long time. After all, for a lot of a long time Germany was thought of one of many industrialized international locations with the most affordable meals. Some neighbors from Belgium or Luxembourg got here throughout the German border particularly to do some cheap buying.

There is a historical past behind the truth that Germany was so low-cost for thus lengthy. The basis for this was laid within the Nineteen Sixties, when the Albrecht brothers made huge use of the low cost precept by founding Aldi: few merchandise within the vary, however low costs – that was the motto. This concept revolutionized German retail and continues to form it right now, despite the fact that discounters have lengthy since expanded not solely their vary but in addition their goal group with natural and plant-based merchandise. Today, each revenue stage retailers in low cost shops.

Only 4 retail teams dominate the meals market: the discounter Aldi, the Schwarzgruppe, which incorporates Kaufland and the discounter Lidl, and the grocery store chains Rewe and Edeka with their discounters Penny and Netto. They share a lot of the market between themselves. In financial principle that is referred to as a traditional oligopoly.

However, the suppliers didn’t make it straightforward for themselves, quite the opposite: for a very long time they engaged in a bitter value battle, which elevated the focus available in the market. This may also be seen within the listing of corporations which have disappeared from the market because the so-called “Aldization”: Plus, Real, Tengelmann – a few of them have been purchased up by the large corporations, others disappeared utterly. Even the most important retailer on the planet, Walmart, needed to admit defeat to the discounters in Germany in 2006. It was too tough to compete towards a budget dwelling group.

This bitter battle had a optimistic consequence for patrons: one of many lowest value ranges in Europe. If Aldi lowered the value of potatoes to 1 euro, it did not take lengthy for Lidl to observe go well with with 99 cents. “The discounters are engaged in one price war after another, food has become ridiculously cheap,” wrote a serious weekly newspaper in 2010.

Ridiculously low-cost, that was as soon as. Anyone who retailers right now will get considerably fewer items than just some years in the past. And this even though the core market construction has remained the identical to at the present time: the identical suppliers proceed to compete for a similar clients – and but the costs are now not low-cost. This raises the query: Does competitors within the German meals commerce nonetheless act as a value dampener?

In response to those questions, the Monopolies Commission introduced a extremely acclaimed particular report on the finish of 2025. Here too, one set off for this was the sharp rise in meals costs. Among different issues, the Commission needed to know whether or not these value will increase in retail have been actually solely because of elevated power and uncooked materials prices, because the supermarkets like to say.

The discovering is uncomfortable for retailers and customers: According to the Commission, the market energy of outlets has not too long ago elevated once more. The 4 main buying and selling corporations now management round 85 % of the market. This makes it much more tough for brand spanking new suppliers to enter.

Above all, the fee notices: According to the report, the margins of outlets and producers have been rising for over a decade in parallel with growing market focus. At the identical time, client costs in Germany have risen extra sharply than in lots of different EU international locations. “The power of food retailers and, in some cases, manufacturers has increased significantly at the expense of consumers,” says Commission head Tomaso Duso. The excessive market focus and rising value markups are “worrying”.

But it isn’t fairly that easy, as a result of there are additionally different readings. The Thünen Institute, a state establishment for agricultural analysis, has, just like the Monopolies Commission, studied meals costs on grocery store cabinets for years and revealed value monitoring. “The analyzes themselves do not produce such different results, but the interpretations differ,” says Anne Margarian from the Thünen Institute, who’s liable for monitoring.

It is true that meals costs in Germany have risen extra sharply lately than in different European international locations. However, this ignores the low beginning stage. The analysis institute additionally sees growing margins, however in the complete manufacturing sector. “So we don’t see any special development in the food industry here, which confirms that this is more of a recovery than an effect of increasing market power.”

The “abuse of market power by companies in the food industry” or commerce is just not documented in “the descriptive results of the Monopolies Commission report”. Of course that does not imply it would not occur, she says. But: She believes that the outcomes of the Monopolies Commission have been interpreted extra broadly within the public dialogue than the report really suggests.

What is no surprise is that when German grocers have their means, the competitors is “extremely good,” because the Edeka grocery store stated in response to a FAS request. In the “intense competition of the German food retail sector”, no firm can afford to broaden margins on the expense of consumers.

Competitor Lidl argues with the value cuts that passed off final 12 months. The discounter “invested heavily in falling prices in 2025 and thus passed on falling raw material costs directly to customers”. This was the case, for instance, with the value of butter, which was decreased a complete of eight occasions that 12 months. “We have also significantly reduced prices in 2025 for other items that customers need for their daily needs, such as pasta, salmon, rice, fruit juices, dairy products and baked goods,” it continues.

But why do clients hardly discover such particular person value reductions?

This has to do with psychology and arithmetic. “Prices that rise are more memorable to us than those that fall,” says Karsten Sandhop from the Federal Statistical Office. Many individuals don’t evaluate costs with the earlier 12 months, however quite with longer durations, for instance with the interval earlier than the corona pandemic – when costs have been considerably decrease.

The second level is solely a buying cart impact. Stephan Rüschen has dealt loads with sellers’ value wars. Rüschen himself as soon as labored within the grocery retailer, and right now he’s a professor on the Baden-Württemberg Cooperative State University in Heilbronn. When supermarkets scale back costs on some gadgets, it might make a giant distinction for the person product, however has little impact on the complete buying basket. “Consumers notice very little of individual price reductions.”

This results in one other accusation: Grocers have very related costs all over the place. Rüschen is aware of this. Most not too long ago, the objection got here from a viewer of a TV present on which Rüschen was an skilled. His reply: “Why do you feel like you’re being ripped off? That’s actually a positive message. If a retailer makes a big announcement that he’s lowering the price of butter, then you can be sure that the other retailer did the same the next day.” This is an indication of notably well-functioning competitors.

For the second, this does not assist the individuals on the checkout. “Pretty expensive.” The cashier merely replies: “Do you have the Lidl app?” It would not assist, even with the client app it is solely 14 cents much less for a carton of milk. The value stays excessive.