The German food industry witnessed a 2.5% month-on-month decline in sales (price-adjusted) in December 2022, according to latest data from the Federation of German Food and Drink Industries (BVE).
Food manufacturers saw a 1.1% increase in domestic sales, while foreign business reported a 9.4% decline compared to December 2021.
In the German domestic market, selling prices increased by 21.4% in this period, while export prices increased by 20.2%.
Calendar- and seasonally-adjusted production index fell by 3.4% year-on-year in December 2022, data showed.
Commodity And Energy Prices
The increase in food production costs were driven by the high prices of agricultural commodities and energy.
In December, month-on-month producer prices for agricultural products fell by 0.4%. However, it increased by 29.7% compared to December 2021.
The year-on-year prices of crop products increased by 13.4%, while that of animal products increased by 42.3%.
In January 2023, the HWWI commodity price index for food, beverages and tobacco increased by 5.3% year-on-year (on a euro basis), partly due to the base effect from prices that had already risen sharply a year ago.
Food companies are burdened by rising energy costs, and is likely to impact the selling prices of food manufacturers in the medium term, the BVE added.
Latest data from the Ifo business climate index, an indicator of the mood and expectations of the food industry, stands negative for February.
The outlook for the future also deteriorated slightly compared with previous months and remains at a low level.
The indicator of business expectations (six months) shows that the number of manufacturers with falling business expectations exceed those with positive expectations, as 11.5 out of 100 anticipate an improvement and 27.4 expect a deterioration.
Despite remaining low, consumer sentiment continued to recover from record lows reached due to economic and political uncertainties.
The GfK consumer climate index rose by 3.8 points in February 2023 compared with December 2022 and now stands at minus 33.8 points.
Economic expectations, income expectations and propensity to buy made slight gains, but remain at a comparatively low level, data showed.
In January 2023, prices for food and non-alcoholic beverages rose by 1.5% month-on-month, while general consumer prices increased by 1.0%.
On a year-on-year basis, food prices (food and non-alcoholic beverages) increased by 19.6% and general consumer prices by 8.6%.
© 2023 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: European Supermarket Magazine.