HomeFITNESSretailers with profit margins of up to 50 percent

retailers with profit margins of up to 50 percent

ASAE revealed expressive profit margins, between 40 and 50 percent on the sale of essential food goods in Portugal.

Data revealed for the year 2022 showed that the gross profit of retailers had margins of up to 50% on the sale of essential food goods.

It’s just that the financial crisis – and food, as a consequence – continues in galloping growth and it’s not new to find increases in each visit to super and hypermarkets.

To reach this conclusion, the Food and Economic Security Authority (ASAE) analyzed reports from January to December 2022, month by month. It was verified, at the tip of the pencil, the evolution of the prices practiced in the sale of essential food products.

The news was made public by the current head of the Economy portfolio, Minister Antónia Costa Silva, and by Pedro Portugal Gaspar, inspector general of ASAE.

What essential food items were analyzed?

The prices of goods such as onions, eggs, oranges, carrots and pork ribs were the ones that most allowed large gross profit margins obtained by retailers. But there’s more.

“From the elements obtained so far, in retail, we registered average gross profit margins, referring to the year 2022, between: 20% and 30% in the sale of white sugar, cooking oil and bream); 30% and 40% on the sale of canned tuna, olive oil and heart cabbage); 40% and 50% on the sale of eggs, orange, carrot and pork chops); and above 50% on the sale of onion)”, says the report prepared by ASAE.

The document points out specific cases in which there was a very significant increase in retailers’ profits – such as the sale of white sugar, which jumped from 7% to 23% between January and December 2022.

In semi-skimmed UHT milk, during the same period, ASAE found that the profit margin per liter doubled, from 9% to 18%. The fish was also under analysis: in the case of national fresh sea bass there was an increase from 2% to 7% in the profit margin. A golden apple is another example that marks the report, having gone from a negative profit margin of -2% to 16% throughout 2022.

ASAE concluded that the average price of a basket made up of essential food products increased significantly by almost 30% during the same period, rising from 74.90 euros to 96.44 euros.

Food crisis and speculation under analysis

According to the inspection body, it is still not possible to know exactly whether retail entities are practicing speculative prices and, therefore, making profits considered as illegitimate. To reach this conclusion it will be necessary to evaluate net profit margins. If there is proven irregularity, the retailers in question are subject to the law for a crime of speculation

What according to the ASAE is already possible to observe is that the reports point to the trend of having a countercycle. That is, while average inflation is falling, food price inflation continues to gallop.

As a reference, the following data, referring to the month of February 2023, stand out:

  • the general inflation rate fell by 0.2% to 8.2%;
  • the index that analyzes the variation in prices of unprocessed food products (primary foodstuffs), shows that there was a worsening, even in the face of the fall in general inflation – the index was 20.11% and this means that inflation reduced, but food prices did not follow the trend.

“There seem to be abusive practices that have to be sanctioned”

The economy minister summarized that, given this scenario assessed by ASAE, there will be sanctions for abusive practices. However, the answers should take a while to arrive – both for retailers and for Portuguese consumers.

“We will be absolutely adamant if there are abusive practices. We have all options open and we will calibrate our measurements as data comes in. We know that operators often act within the rules, but this does not exclude abusive practices”, said António Costa Silva.

The Government intends to hear the sector, through its representatives, before proceeding with sanctioning measures. António Costa Silva wants to “understand if there are rational explanations” that justify the escalation of prices of food in the country.

The Government will assess measures to combat speculation, which are already practiced in countries such as France and Spain. “We are considering all options, including the most muscular ones, but we want to take these measures in possession of the necessary information”, guaranteed the minister.

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