Food inflation punishes the poorest families

BarcelonaFood prices have risen significantly since the end of the pandemic, hitting lower-income families hardest, both in Catalonia and across Spain and Europe. This is the main conclusion of the study. Why is the price of food rising? The role of the food oligopoly and proposals for a change in the model, published this Wednesday by the Barcelona Institute for Urban Research (IDRA). The study, prepared by researchers Rubén Martínez and Adrià Rodríguez, points out that strong business concentration, both globally and in national distribution, explains why food inflation has been so high over the past four years.

"The prices of essential products such as meat, milk, and butter have increased by between 30% and 50% compared to pre-pandemic levels" in the eurozone, and some products have become even more expensive, the report notes: "Foods such as coffee, olive oil, and olive oil have also been among the products with the highest increases in the food basket." In this sense, Spain has been no exception on the continent, and "food prices have increased by 34% in the last five years, placing them close to the European average," the text adds.

This price increase has had a direct impact on citizens' wallets, as the rise in food prices has been greater than that of all consumer goods and services purchased by families. "The gap between food prices and general inflation is a structural phenomenon, not a temporary one," the study indicates. In this sense, spending on food represents "one-fifth of the general price index" and has a direct effect on "the perception and social impact of inflation," because it is an expense that everyone must spend daily.

The authors point out that one of the main reasons for these sharp price increases was the high concentration of businesses at various levels. On the one hand, five multinationals that control between 70% and 90% of the global cereal market "recorded record profits, with increases of between 75% and 300%" in 2021 and 2022, the two years with the highest inflation in the last four decades. In Spain, "six large groups – Vall Companys, Ebro Foods, bonÀrea, Nestlé, Coca-Cola Europacific Iberia, and Grupo Fuertes – concentrate more than 100 key brands and companies" and totaled "€1.281 billion in profits in 2024," while the supermarket sector also closed at 0.7%.

"Very regressive" impact

How has rising food prices impacted different sectors of society? The IDRA study is conclusive: "The effect of this food inflation on households has been highly regressive." An economic phenomenon is considered regressive when it penalizes the poorest population more than the richest. "Lower-income families—who allocate a larger proportion of their budget to food, up to 21.7%—have been the most affected," explains the report, on the impact of food inflation in the Barcelona metropolitan area.

"In metropolitan Barcelona, 43% of households are below the subsistence threshold," the document recalls. One of the reasons they live in a precarious situation is that one in three must spend more than half of their income on rent, to which must be added 12% to cover basic utilities such as water, electricity, and gas. "This leaves a very narrow margin for food, turning any increase in food prices into an immediate crisis for thousands of families," the study's authors analyze. If we zoom in on Catalonia, we find that "24% of the population lives at risk of poverty or social exclusion," which puts all of these households in even worse conditions to withstand rising food prices.

In fact, the study points out that in Catalonia, "food is one of the most stressed items" for low-income families: "Rising prices have led to a deterioration in purchasing power, especially in single-parent households, those with older people, or those with precarious jobs," it adds.

In addition, the phenomenon called cheapflation (from English cheap, cheap, and inflation, inflation): When lower-income households try to adapt to rising food prices, they often do so by buying cheaper products (e.g., store-brand products), smaller quantities, or lower quality products, but these products are precisely those that experience "price increases that are often more intense than mid- or high-end products." "In Spain, the cheapest products increased by 37 percent between 2021 and 2024, while high-end products increased by 23 percent," the document states.