With the free play of supply and demand, the market has kept food prices in Germany at a low level for a long time. But prices have been skyrocketing for months. A large majority of consumers want government intervention.
In view of the price explosion in supermarkets and discounters, according to a survey, the vast majority of people in Germany are now also in favor of government intervention in food prices. A scenario that many economists are warning about. “Customers experience the price increase in food as so severe that they want to use all means to be able to shop cheaper again,” said retail expert Vanessa Seip from the management consultancy Oliver Wyman, summarizing the result of a representative survey of 1,000 consumers in Germany .
In the survey, 91 percent of respondents spoke out in favor of government interventions such as statutory price caps or subsidies for food. Only 9 percent believed the government should stay out of pricing. Possibly inspired by the fuel discount and the gas price brake, around half of those surveyed supported an upper limit for price increases depending on the product group. A third of those questioned saw the government’s price cap for an average shopping basket as the solution.
For many economists, government price limits are a nightmare scenario. Economics Nobel laureate Paul Krugman called the idea “truly stupid”. The list of unsuccessful attempts to simply set prices by state dictation and thus limit inflation is long. Bottlenecks often arise when it is not worthwhile for manufacturers and retailers to offer goods and services at the fixed price. Most recently, Hungary had to lift a corresponding regulation for fuel prices because the country was no longer sufficiently supplied. Many economists also classify the Berlin rent cap, which led to a slump in the rental apartments on offer, in the category of failed price controls.
In view of the current crises with extreme price increases in energy and disrupted supply chains, an increasing number of economists are calling for new forms of price controls. This includes capping the price or subsidizing a limited basic need. This is intended to provide an incentive to save and not completely eliminate the effects of supply and demand. This idea is the basis of the federal government’s so-called gas price brake.
In 2020, 79 percent of all consumers still rated the performance of the retail trade as good or very good, but the value slipped to 36 percent within two years. According to the survey, 18 percent already consider the performance of retail to be insufficient or weak. “Unlike in the corona crisis, when consumers gave their dealers and their protection concepts good marks, they feel left alone in times of inflation,” said Seip.
