European consumers’ behavior related to the purchase of basic food and household items in hard times isn’t matching that of Americans, with some Europeans now simply opting to not buy these products as prices soar.
Citing sales figures data from major food, household and sanitary product giants Unilever and Procter & Gamble, British business media pointed to a noticeable dip in Europeans’ purchase of everything from Vaseline and diapers to detergents, soaps, razors, shampoos, mayonnaise and ice cream after the companies raised prices by about 10 percent between January and March of this year.
Senior executives complained that European consumers’ stretched budgets have made it hard to jack up prices without companies losing sales volume, with people either switching to cheaper no-name brands or doing without.
“We are seeing higher price elasticities in Europe,” Unilever financial director Graeme Pitkethly said, referring to consumers’ sensitivity to further price hikes.
“Inflation pressures in Europe weighed more heavily on consumption” during the present quarter, Proctor & Gamble CEO Andre Schulten said. “Europe continues to be a high-pressure environment,” he added.
The companies confirmed small upticks in the purchase of some products in the United States and the Western Hemisphere at the same time that European purchases have dropped. For example, Dove soap sales fell by 3 percent in Europe, but increased by 0.6 percent in the Americas, with Gillette razors and Head & Shoulders shampoo sales falling by 7 percent in Europe, while seeing a “modest” rise in the US.
Not all of the companies’ brands were affected, with the sale of ‘organic’ products, which typically appeal to wealthier clientele, increasing by 8 percent in Western Europe, at the same time that they rose by 6 percent in the US.
Eurozone inflation has spiked dramatically over the past year, with the Euro area seeing a 6.9 percent overall bump in March. However, food, alcohol and tobacco inflation hit 15.4 percent during the same month – its highest showing over the past year.
Eurozone inflation also varies dramatically depending on country, with Spain, the Netherlands and Belgium reporting inflation of just 3.1, 4.5 and 4.9 percent, respectively in March, while Lithuania, Estonia and Latvia saw it jump to highs of 15.2, 15.6 and 17.3 percent, respectively over the same period.
The US, by comparison, has seen inflation drop to 5 percent amid aggressive interest rates hikes by the Federal Reserve after hitting a high of 9.1 percent last June.
The dual inflationary-energy price crunch faced by Western countries stems from attempts by Washington, Brussels and London to sanction Russia into submission after Moscow launched its special military operation in Ukraine last year. Russia responded to the restrictions by reorienting exports of energy and raw materials to other countries, and moving to replace dependence on US and European finished goods to Chinese, Belarusian and domestically-made products.
Europe, which has traditionally depended on Russian energy to fuel its industrial base, has been hit harder by the crisis than the US, which enjoys a measure of energy independence, with European industries beginning to migrate to North America as business leaders have warned of the deindustrialization of their home region.