As food prices saw an inflation rate of 21 percent in August, shoppers have started to buy more lower-priced foodstuffs, such as vegetables, while there has been a large surge in interest for discounted items in those areas where prices have risen, such as in dairy produce, a spokesperson for one supermarket chain says
Longer-term, while price rises may slow-up, some supermarkets may have to close their doors as they struggle to maintain margins.
While the bigger picture hasn't transformed very much yet, with the higher prices, consumers are purchasing 10-15 percent less food than before, Kristjan Anderson, head of business accounting at Estonian-owned supermarket chain Selver says, while less expensive vegetables are finding their way into shopping baskets more frequently, he said.
Food product sales had already seen a decline of a couple of percent most months since April this year, Anderson told ERR's radio news.
He said: "If we look at August now, the rate of decline somewhat slowed up: Whereas in July the fall was just over 2.5 percent, in August it stood at minus 0.7 percent.
"However, if we look at the financial turnover, the biggest increase for this year has been 16.1 percent."
"We do here have to set aside the inflation indicator, however, which was 21.1 percent for food products in August. The difference between turnover in terms of money and in terms of volume has reached its widest point over the year so far, and is already more than 17 percent. The public are not buying more things than they did last year, but turnover growth comes only at the expense of price increases," Anderson went on.
Compared with the start of the year, prepared foods have come under particular pressure in terms of larger price rises, he added. "In the summer months, their volume sales definitely slowed down, while the inflation rate of over 15 percent had already reached this sector as well. This is also noticeable in shopping preferences - somewhat less ready-made food is being placed in the baskets than before."
Looking ahead, inflation will remain – with September and October's rates for food likely to be similar to August's 21 percent – though dropping below the 20-percent mark for the last two months of the year, he said.
Market segments which had seen the highest price rises were also seeing the most uptake in discounted offers, Anderson went on, citing figures of a 50 percent to two-fold rise in share for discounted dairy and bread/bakery-related produce, both food categories to have seen the highest rise in prices in recent months.
Fruit and veg prices have leveled off, however, so purchases are being made more frequently in this category, Anderson said, while fish is another area to have seen a slowing of inflation – though the same cannot be said of meat which, like processed food, bread and dairy, will continue to see a rise.
As to next year, inflation as it affects food should be below 10 percent, assuming there are no more significant developments, he added.
Overall, consumers have been canny in their purchase and setting off inflation against areas where they can make savings, even in dairy produce, while campaign products overall have seen a 40-percent rise in sales.
For merchants, however, a critical moment has arrived where soaring operating costs make maintaining margins tougher.
This could lead to store closures in the future, he added.
Editor: Andrew Whyte, Mari Peegel
Source: ERR radio news, Indrek Kiisler