Inflation: how the explosion in the price of sugar affects our purchasing power

One rainy Wednesday evening, in the parking lot of a supermarket in the western suburbs of Paris, Sonia, head bowed, pulls her shopping bag with one hand while scrutinizing her receipt. Concentrated on the details of the euros and cents that add up, the mother looks grim. The total reaches 120 euros. With two teenagers aged 11 and 15 at home, she estimates she will have enough time for a week. “No matter how much I watch for promotions, choose the lowest prices, I have the impression that everything is becoming more and more expensive and that my basket is filling less and less. » A study by the organization UFC-Que Choisir confirms this feeling, common to many French people: in January 2024, according to its authors, food costs 25% more than in January 2022. An emergency law against inflation was even promulgated, to lower prices on shelves from January. What relief for the third of French people* who must now limit their food purchases? Everything will depend on negotiations between manufacturers and distributors.

In the meantime, Sonia has learned to moderate her desires: in her shopping bag, we find chocolate cereals for her children’s breakfast, apricot jam and sandwich bread for hers, Bolognese sauce for accommodate the pasta – frequent on the menu lately – a few fruit yoghurts and a pot of Nutella spread, the family’s only “little pleasure”. What do all these products have in common? The “big bad” sugar. In October 2023, the price of this white powder, invisible but omnipresent in our food, reached $735 per tonne on the London Stock Exchange.

Obviously, this market price, twice as high as in 2019 and at its highest level since 2011, has an impact on the purchasing power of households. “Among the ten families of products whose prices have increased the most in one year, we find: sugar and sweeteners (+18.4%), sweet biscuits (+10.7%), canned vegetables ( +10.3%), yogurts (+10.1%), or even breakfast cereals (+9.2%),” lists Lionel Maugain, journalist for the National Consumer Institute. “So many foods contain added sugars. » This share can go up to 25% of the composition of the product, as in the case of cereals.

Brazil’s weight in sugar production

Faced with these hazards, all eyes are turning to Brazil. The Latin American giant produces more than 20% of the world’s sugar. Such a concentration of production in a single point on the planet places millions of people in strong dependence on Brasilia. However, the country is a very versatile trading partner. “Depending on their economic orientations, Brazilian leaders make rain or shine on the market,” underlines Timothé Masson.

Especially since Brazil is also the world leader in the manufacturing of bioethanol fuel from the fermentation of sugar cane. Flexfuel cars – whose engines run on pure ethanol or with a gasoline-ethanol mixture – represent nearly 40% of its vehicle fleet, the largest fleet in the world of vehicles running on biofuel. When oil prices rise, Brazil incorporates more bioethanol into the gasoline sold in the country, which has the effect of reducing the sugar available on the planet and pushing prices up. Result: the cost of the sugar we use to cook our cakes is closely linked to that of black gold.

A very energy-intensive industry

In this domino game where each ton of sugar produced strengthens the food and energy sovereignty of a country, France is now encountering headwinds. Russia’s invasion of Ukraine has caused energy costs to skyrocket. However, dependence on gas imports is the Achilles heel of the sugar industry. “When our factories start up, we enter the top ten of the largest gas consumers,” explains Frédéric Laborey. This increase in production costs is reflected in the price of sugar. »

Another factor: the environment. In 2023, the EU banned the use of neonicotinoids, these insecticides which protect beets from yellows but cause the death of pollinators such as bees. Beneficial for biodiversity, this ban nevertheless plunges planters into uncertainty as to their future yields. Some people might turn away from beet growing if nature proves more capricious and prices less attractive than this year.

These uncertainties are fueling the surge in our consumer products spiked with sugar and leading to a lasting loss of purchasing power for the French. “We will never return to the prices of two years ago,” warns Emmanuel Cannes, pricing expert for distributors at market analyst NielsenIQ. Because a drop in inflation, as announced by the government, does not mean that prices are decreasing, only that they are increasing less quickly. And sugar, an essential commodity in our globalized economy, is not going to help us reduce our receipts.

*NielsenIQ study in The echoes July 28, 2023.