Faced with the runaway prices of oil, milk, eggs, and almost any other product in the shopping basket, consumers have had no choice but to adjust their consumption habits. In the first five months of the year, BBVA Research has registered an average year-on-year drop of 2.4% in food purchases with cards. The drop in the average ticket in May coincided with the biggest rise in the history of food and beverages: 11% year-on-year, according to the National Institute of Statistics (INE).
Bank figures show that the number of transactions has increased, but users spend less than a year ago. The entity’s study service believes that this is due to the fact that families are pulling the credit even in the smallest purchases, in order to defer expenses. If a few months ago the loaf of bread was paid with cash, today it is by card. BBVA adds another option: consumers go to the supermarket more often, but buy fewer products or take the cheapest option. This would also increase the number of transactions and decrease the average ticket.
Banks are not the only ones detecting changes in consumption habits. The consulting firm Kantar also believes that the Spanish are getting around the increase in the price of the shopping basket by resorting to different strategies. According to the company, today four out of 10 households look for promotions in mass consumption products, which implies the substitution of one food for another and the preference of white brands. Although the effect is not yet very pronounced, the company fears that it will worsen throughout the year and end up reducing household spending by up to 10%. His fear is shared by the Association of Manufacturers and Distributors (Aecoc), according to which users recompose their purchasing preferences and avoid spending on durable goods whenever there is lasting inflation, as is the case.
According to the consultancy, 40% of households have also cut their consumption in other products and services, particularly in bars and restaurants, as they do not involve a basic necessity expense. BBVA data corroborate this trend. In month-on-month terms, it can be seen that, after the boost provided by Easter, the growth in card spending moderated in all service activities, especially those associated with tourism and entertainment, such as travel, accommodation, transport, restaurants and leisure, where spending went from growing 72% in April to 52% in May. Compared to the previous year, it can be seen that bars registered a drop of 4.9% in May, while leisure overall it was 4.6%. The loss of dynamism also coincides with a year-on-year increase in rates for these sectors of 6.3%, a maximum in 21 years, according to the INE.
In any case, the Spanish are tightening their belts in the face of the uncertainty generated by the war in Ukraine and the rise in the CPI. The loss of purchasing power sank family spending in the first quarter of the year by 3.7%, according to official data. Last week, the Bank of Spain revised down its growth forecast for this year to 4.1% from the 4.5% it forecast in April, as a result of this collapse in consumption. It anticipates that confidence will be restored in the second half of the year, but the increase in private consumption compared to last year will be minimal: 1.4%, according to the projections of the supervisory body.
Kantar determined at the end of March that 89% of households think that you can no longer buy without looking at the price of products, 61% say that it is not a good time for certain outlays, another 56% now want to spend less , and 45% tend to consume less in their usual purchases. In the current context, it is foreseeable that uncertainty will increase. Bread and cereals are being fully impacted by the war, as Ukraine and Russia are major grain exporters. Dairy products and meat also rose, in line with higher feed prices. Olive oil has become more expensive by 36.5% compared to last year and eggs by 25.3%. In the global calculation, food contributed almost two tenths of a percentage point to the year-on-year CPI in May, influencing more than electricity in the rise in prices.
Food industry production
The Spanish food and beverage industry recovered a large part of what was lost in the pandemic in 2021, registering a production of almost 140,000 million euros, 5.3% more than in 2020, according to the report published yesterday by the Spanish Federation of Food and Beverage Industries. The sector lacked 600 million to reach the figures for 2019. Apart from production, the gross value added (GVA) in 2021 stood at 26,660 million euros, with growth of 11.2%. In this way, the weight of food and beverages over the total economy stands at 2.5%.
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