Stretched households start to cut back on food purchases

Beset by the highest unemployment rate in Europe, inflation, wage containment and tax hikes as part of the government’s austerity drive, and having long since abjured luxuries, Spanish households are now cutting back on purchases of food to make ends meet.

Not only are families, for example, switching from olive oil to cheaper forms of cooking oil, they are also cutting back on the amounts they purchase and are leaving out items such as wine from their shopping lists.

According to figures released by the Agriculture, Food and Environment Ministry, the amount of items purchased by households in October fell by 1.8 percent and by 2.3 percent in September when average prices increased by 0.7 percent. According to the ministry’s monthly survey of 12,000 homes, spending on food per person has fallen for the past three recorded months.

Consumption of olive in October fell 15.7 percent, while that of sunflower oil climbed one percent. Consumption of still wine dropped 9.4 percent, while sparkling wine declined 9.8 percent.

“Average income fell in [2012], particularly after the summer when news on the economy started to get worse and the rise in the value-added tax rate took effect in September, which in the case of many products rose from seven percent to 10 percent,” explains Javier Vello, a partner with the consultant PricewaterhouseCoopers. “You have to bear in mind that Spain is one of those countries where they throw away a lot of food, and economic problems are changing that.”

Although figures on food consumption for November and December are not yet available, according to the monthly economic bulletin released by the Bank of Spain at the end of December, demand at the end of the year remained weak. It noted that the consumer confidence index compiled by the European Commission remained at low levels.

This cutback in food purchases has evidently had an impact on the sales of companies in the sector. According to Horacio González, the general manager of the Federation of Food and Drink Industries (FIAB), turnover in the sector is likely to mirror what happened last year when it fell 1.3 percent. “It has been strange, very uneven. Companies agreed that the summer was good but they noted a slowdown toward the end of the year,” he said.