Alex Trelinski
SUPERMARKET profit margins are rising in Spain as food inflation continues to fall according to a government survey.
Figures have been produced by the Business Margin Observatory for the second quarter of 2024.
They show that food retailers and distribution chains have shot to historical highs since the current measurements were introduced in 2009.
READ MORE:
- Inflation in Spain fell to 2.8% in July helped by lower electricity and food prices
- Spain’s top supermarket Mercadona announces €150m in food price cuts including olive oil
- Spain’s Pedro Sanchez wants to continue VAT cuts on food into the summer
The Tax Agency is projecting that sales margins will finish the year at 12.65%- a record high.
The margins on sales for the food sector stood at 12.16% between April and June, more than a point and a half above the first three months of the year.
It’s also a big year-on-year rise when 8.22% was recorded in the 2023 second quarter.
Food inflation has been reducing after two and a half years of escalation.
In July, the annual rate was 3.1%- the lowest level since October 2021 as reported this week by the National Institute of Statistics (INE).
But consumers are hardly noticing any difference for a variety of reasons.
The VAT reduction from the government appears to have had a limited impact on prices, and supermarkets have been passing cost rises to final prices.
The Ministry of Consumer Affairs did order the main supermarkets to show they were not using the VAT cut to boost profits.
Supermarkets say that their profit margins are less than 5% and in many cases, just around 2%.
Nevertheless, the main chains reported record profits in 2023.
