Shopping carts emptied, savings are affected by shopping. The ECB: “Unjustified increases”

The stacks of Easter cakes discounted up to 60% that look desolate with pallets of underpriced chocolate eggs explain better than any number how much inflation is eroding the purchasing power of families. And how, in cascading, spending habits are changing. Even around the holidays. A phenomenon fueled by expensive energy and the war in Ukraine, but which according to central bankers is above all due to speculation by producers. It would not be otherwise explained how multinationals, from Unilever to L’Oréal, closed 2022 with record growth in margins and profits (+24.9% the former, +24.1% the latter), while large-scale retail faced with an increase in revenues – driven by inflation – has recorded a contraction in profits.

According to the latest Istat survey, in February, retail sales increased by 5.8% in value compared to the same period of 2022 and fell by 3.5% in volume, with foodstuffs accentuating the gap: +7.9% in value and -4.9% in volume. And while small shops continue to suffer, the race of the discounters continues which, thanks to offers and sales below cost, have seen sales grow by 9.9%, consolidating a trend started last year. And again Istat observes how the “particularly strong growth in consumer prices” in the last quarter of last year “has led to a significant decrease in purchasing power” which fell by 3.7%. With the result that the “resilience of final consumption expenditure (+3% in nominal terms)” was financed by household savings which fell by two points in the fourth quarter of last year and by 5.1% in the whole 2022 compared to 2021.

«The loss of purchasing power, high bills and the rising cost of living will have repercussions on the growth of our economy. The Meloni government must intervene on prices such as food or the shopping cart. But above all it must intervene on wages and pensions», says Senator Tino Magni of the Alleanza Verdi e Sinistra. And the president of the national consumer union, Massimiliano Dona, relaunches: «Italians are starved by the cost of living, they have never tightened their belts so much. Compared to January, even food sales fell by 0.3%, which fell by 1.8% in volume». At the expense, Coldiretti accuses, it is above all fruit and vegetables, whose purchases have dropped by 8% compared to 2022.

A situation that clashes especially when compared to that of companies. According to Eurostat, in the fourth quarter of last year, the profits of European companies increased from 40.4% to 42%, the highest value since 2007. «The high level of profits, as well as encouraging for the economy, it creates spaces to recover purchasing power without excessive inflationary pressures», commented the European Commissioner for the Economy, Paolo Gentiloni. On the other hand, Fabio Panetta, former general manager of the Bank of Italy and member of the executive committee of the European Central Bank, has a completely different opinion: in a public speech last March 22, he hinted that the fall in purchasing power was at the basis of both speculation. “Corporate opportunistic behavior could delay the decline in core inflation. In fact – he said – profits contributed to more than half of the price increase in the last quarter of 2022″, Panetta then underlined how “in some sectors, profits are rising sharply and retail prices are rising rapidly , despite the fact that wholesale prices have been declining for some time. This suggests that some producers have exploited the uncertainty created by high inflation and mismatches between supply and demand to increase their margins, raising prices beyond what is necessary to absorb the increase in costs. This is why the ECB should “monitor the risk that a profit-price spiral could make inflation stickier”.