Aldi raises prices: does inflation mean the end of cheap groceries?

What's going on at Aldi right now?

Stefanie Diemand

Editor in Business.

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The discounter Aldi announced its third price increase in a short time on Friday.

Meat, sausage and butter are becoming significantly more expensive, according to the headquarters in Essen.

Other product categories have also become significantly more expensive.

This is remarkable, because price increases of this frequency and form are a rarity by Aldi standards: so far, more than 180 products have increased in price, some by just a few cents, others by one euro.

What's so remarkable about Aldi raising prices?

The discounter is considered the price leader in the food trade.

If Aldi changes the prices, other grocers regularly follow suit.

Competitors such as Lidl, Edeka and Rewe followed Aldi's recent price increases - or raised their prices even more in some cases.

According to industry information, Rewe is said to have increased around 600 prices, some of them above the respective Aldi price.

Are farmers finally getting more because of rising prices?

The debate about food that is too cheap from the point of view of critics has been going on for a few years now.

Farmers demonstrating in front of Lidl or Aldi branches made a deep impression, especially on consumers who are oriented towards sustainability.

Unfortunately, farmers do not automatically earn more money with rising supermarket prices, after all, production costs are rising at the same time: in addition to energy and fuel costs, fertilizer prices have also risen significantly.

The farmers' association even proposed a fertilizer reserve this week.

Why is food getting more and more expensive now?

Manufacturers and retailers are facing a number of challenges: in addition to high transport costs and energy prices, the ongoing corona pandemic has been affecting companies for more than two years.

The war in Ukraine has made this situation even worse.

Seasonal fluctuations are not uncommon, but the war is seriously threatening this year's harvests.

"Regardless of this, the supply of raw materials is naturally a limiting factor," says Boris Hedde, Managing Director of Market Research IFH Cologne.

If raw materials are scarce, their procurement is of course more expensive.

The manufacturers, such as Eckes Granini, also complain about this.

Accordingly, the prices are not only rising for raw materials and packaging, but also massively for energy and transport.

"We have significant cost inflation across the board,

How much are prices going up?

Very different.

Some of these are price increases of just a few cents, but some goods are more than one euro more expensive.

But even an increase of a few cents can lead to a significant increase in price, depending on the product.

Aldi's mineral water at Quellbrunn no longer costs 19 cents, but 25 cents.

That's a good 30 percent more.

This is extraordinary as the price of Aldi mineral water has remained stable for decades.

According to the Federal Statistical Office, food prices rose by an average of 6.2 percent in March.

The last price increases for wheat and vegetable oils were particularly high.

Does it keep going like this?

Given the current situation in Ukraine, that is quite possible.

According to a current survey by the Ifo Institute, more and more companies are planning price increases in the next three months.

However, market researcher Hedde from the IFH Cologne expresses himself a little more cautiously: "Against the background of energy costs, it is currently difficult to predict how much and how long prices will rise," he says.

However, there are also retail experts who believe that negotiations between manufacturers and retailers are only now really getting hotter.

Because the dealers actually like to pile low on prices - they are considered to be the brakes on inflation.

This has led to major conflicts with manufacturers in the past.

Anyone who asked for more than what the trade wanted was quickly removed from the list and replaced with a private label product.

This has even happened to well-known brands like Coca Cola.

Now retailers suddenly have to bow down if they want to have products on their shelves in the future.

Will certain products soon be missing from the shelves?

Even during the corona pandemic, some shelves in the shops remained empty at times because, for example, toilet paper or pasta were hoarded.

Wheat and sunflower oil are already hard to come by in many shops - or are deliberately rationed by retailers.

This is also reflected in the sharp rise in demand for cooking oil, which according to the Federal Statistical Office in the week from March 7th to 13th was more than twice as high as in September 2021 with an increase of 123 percent. Demand for flour tripled even with an increase of 206 percent.

The Federal Statistical Office associates this increase with the beginning of the war in Ukraine, because such jumps did not occur in the past six months.

According to the Federal Association of the German Food Trade (BVLH), the supply of other goods such as flour or pasta could also be somewhat lower than usual in some areas and in individual regions.

However, the association expects a stable supply of basic foodstuffs or everyday goods nationwide for Germany.

How are customers reacting?

Whether consumer behavior will change can only be guessed at.

The Cologne IFH market researchers investigated this in a survey.

According to this, almost half of those surveyed fear that they will no longer be able to make a living.

Around 60 percent therefore refrain from buying branded products, and around 45 percent want to shop more frequently at discounters instead.

Every second person already states that they have problems when shopping due to delivery bottlenecks.