Overpriced Food? We Don’t Buy It!

Prices for foods like bread, butter, cheese, cooking oil, and potatoes have soared since 2020. What were initially thought to be temporary price adjustments soon turned into an ongoing trend and then a social crisis. The Rosa Luxemburg Foundation is spotlighting these developments with a campaign and a wealth of resources. Click on the links to find out what lies behind the price rises, who profits from them, how they are exacerbating social divisions, and what can be done to stop this trend.

Food Prices Have Risen Steeply

It is no longer possible to blame all price rises on the Covid-19 pandemic and Russia’s invasion of Ukraine. For people on low incomes, going to the supermarket is becoming a serious challenge. But while many consumers are having to compare prices, do their calculations and cut back on spending, large supermarkets and food companies are making huge profits. This raises questions about the true causes of the price increases. 

Prices Are Rising Faster than Wages

Income trends in Germany paint an alarming picture: Although wages did rise slightly between 2020 and 2024, adjusting for inflation reveals a clear loss of purchasing power. According to calculations by the Institute of Economic and Social Research (WSI), part of the Hans-Böckler-Stiftung, 2022 saw the biggest drop in real wages since records began. Today, people in Germany can afford much less than they could before the crisis.

Corporate Profits Drive Inflation

It is often claimed that inflation is largely caused by external factors like energy prices, climate change, or supply chain issues. But recent research paints a different picture: An analysis conducted by the European Central Bank in 2023 shows that a considerable percentage of inflation can be attributed to higher corporate profits. Particularly in the food sector, higher costs were not just passed on to consumers, but used as a pretext for disproportionate price increases. As a result, from 2023 onward, food price inflation became a key driver of general inflation. While other inflation drivers, such as raw material and energy costs, have stabilized, food prices have remained high.

A Food Price Crisis on an International Scale

Food price increases are a global phenomenon that is exacerbating poverty and hunger, particularly in poorer countries. The Food and Agriculture Organization (FAO) documents this development in its monthly Food Price Index, which reached a historic high in 2022 and was still significantly above pre-2020 levels in 2023.

A number of different factors are pushing up food prices worldwide: Crop failures are becoming more frequent because of the ongoing climate crisis. The increase in market power of a few large agricultural corporations makes the markets more susceptible to speculation. These companies control large shares of the global trade in staple foods such as wheat, maize, and soy, and have an influence on prices and quality — from the seed sold to farmers to the food on our plates. This enables them to exert a downward pressure on producer prices in times of crisis and to generate additional profits by raising consumer prices.

The increasing financialization of agricultural markets is another problem. On the commodities exchanges, grain is traded as a financial product in volumes that exceed the amount of grain actually traded several times over. This food price speculation amplifies price fluctuations and can lead to artificial price increases.

International prices also have a direct impact on the situation in Germany. Consumer prices in Germany are closely linked to global markets through the European Single Market and the global interconnectedness of the food industry. Major supermarket chains, including those in Germany, often use these complex relationships as an excuse for price hikes, even though they are not always justified by the actual cost increases in international supply chains.

Oligopoly in the Food Retail Industry — Market Dominance Promotes Price Rigging

In Germany, a handful of large retail groups — Edeka (with Netto), Rewe (with Penny), Aldi (Nord/Süd), and the Schwarz Group (Lidl/Kaufland) — control around 85 percent of the food market between them. This extreme market concentration puts them in a powerful position when negotiating with producers, and enables them to impose higher prices and restricted choice for consumers. In its 2023 report on the food retail sector, the Bundeskartellamt, Germany’s federal competition authority, calls this market concentration problematic and highlights the risk of abuse of market power.

This problem became particularly visible in 2022 and 2023, when many retail companies reported high profits, despite the public discussion about cost increases. For instance, the Schwarz Group (Lidl/Kaufland) recorded an annual profit of 1.9 billion euro in the 2023/24 financial year, while the Rewe Group generated profits of 736 million euro. These figures show that major retail groups were able to expand their market position in the crisis years and achieve windfall profits.

Opaque Pricing Obscures True Costs

The biggest problem is the lack of transparency in pricing. Consumers, authorities, and independent organizations are all equally at sea when it comes to working out how the end price of a product is arrived at, and which actors in the supply chain receive what share. This lack of transparency makes it possible for dominant companies to set prices for their own benefit. For this reason, organizations like Germany’s Verbraucherzentrale, independent consumer advice centres, are calling for Germany to establish a price observatory to identify inflation drivers and expose price fixing between large corporate groups.

The Social Impacts of Rising Prices

Rising food prices are having a dramatic impact on many people. In 2023, around 13.1 percent of the German population could not afford to eat at least one full meal every two days. From a global point of view, the impacts are even more drastic — in poorer countries, families have to spend up to 80 percent of their budget on food, and around 30 percent of the global population suffers from moderate to severe food insecurity.

The current situation clearly shows that a system in which a handful of large corporations controls the food market is highly susceptible to price abuse in times of crisis. Examples from Spain and other countries show that there are political levers that can be used to regulate the industry, such as price caps.

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