Inflation is primarily caused by increased manufacturing costs and poor harvests, and has a significant impact on the cost of living and spending behavior of Spanish residents.
According to Nielsen IQ research, the average annual household shopping basket has increased by €800 in the past year, even though consumers are in saving mode, actively comparing prices and seeking promotions.
The olive oil sector, particularly extra virgin olive oil, has experienced significant price increases, with prices increasing by 79%, 69%, and 60% for extra virgin, virgin, and non-virgin olive oils, respectively.
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As a result, the demand for these oils has decreased significantly: 41 percent for extra virgin olive oil, 14 percent for olive oil, and 11 percent for virgin olive oil. These figures are estimated to constitute the most significant sustained decline in demand since the turmoil of the Spanish Civil War in the 1930s.
Sales shifted to alternatives such as sunflower oil, with demand increasing by 16% and prices falling by 36% compared to November 2022.
However, demand for olive pomace oil has soared by 70% despite an 18% price increase, suggesting strong reluctance to abandon such an iconic oil completely.
According to Nielsen IQ data, consumer goods sales in Spain rose by 8% in November 2023, with average prices rising by 6%, the lowest fluctuation of the year.
Despite overall positive growth of just over 1%, sales growth slowed in the three main sectors, with food leading the way in spending, with sales increasing 8%, compared to the previous 2. This was slightly below the digit growth rate.
Correspondingly, average prices increased by 7% and sales volumes increased by just 1%.
Valencia resident Javier Ferrer said his elderly mother was finding the increase in food costs especially difficult.
““I’m worried about her health,” he said. “she survived covid-19 [pandemic], but she is old and not very strong. Her eating habits have become even poorer because everything is expensive for her, and I can’t help much because I’m almost broke now. ”
Such concerns were already widespread. In a major study in 2022, Save the Children found that the quality of Spain’s diet has experienced an unprecedented decline mainly due to socio-economic factors, in part due to the complex effects of the COVID-19 pandemic. It warned that there would be a decline in the economy, exacerbated by rampant inflation in 2022. And in 2023.
Certain sectors, such as drugstores, perfumes and beverages, which typically see a surge in sales in the run-up to the Christmas period, each posted modest sales growth of 7%.
Demand data shows a similar pattern in these categories, with sales volumes for beverages, drugstore products, and perfumes increasing by 1% and average prices increasing by about 6% each.
Among the products most affected by inflation in November, drugstore products topped the list with a 23% increase, followed by petroleum with 23%, baby food with 20%, and olives and pickles with 15%.
Prices for products containing grated cheese fell by 8%, followed by laundry products by 7% and kitchen and toilet paper by 6%.
Private label value grew by about 11% through the end of November, outpacing white label brands’ 5% increase. Volumes increased by 5% for private labels but decreased by 3% for white label brands.
Overall, a complex interplay of rising prices, changing consumer preferences and economic challenges paints a delicate picture for the Spanish consumer goods market in the final weeks of the year.