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High Inflation Persists In The Eurozone’s Food Service Sector

As inflationary pressures continue to ripple through the global economy, the Eurozone’s food service sector remains particularly hard-hit, with high inflation rates persisting well into 2024. This sustained pressure on prices is having a profound impact on both consumers and businesses within the industry, leading to a challenging environment for all stakeholders.

The hospitality industry, especially restaurants and cafes, has been grappling with rising costs across the board. From raw materials to energy prices, the cost of doing business in the food service sector has seen a significant uptick. This inflationary trend, driven by a combination of supply chain disruptions, higher wage demands, and elevated energy prices, shows little sign of abating.

For consumers, this means that dining out has become increasingly expensive, with many establishments forced to pass on the rising costs to their customers. The consequence has been a noticeable shift in consumer behaviour, with a reduction in discretionary spending on dining and leisure activities. Businesses, in turn, are caught in a delicate balancing act—raising prices to cover costs without alienating price-sensitive customers.

Industry analysts have pointed to several contributing factors behind this inflationary persistence. The lingering effects of the COVID-19 pandemic, coupled with the geopolitical tensions affecting energy supplies, have created a perfect storm that continues to drive prices upward. Additionally, the ongoing labour shortages in the hospitality sector have led to higher wages, further fuelling the inflationary cycle.

Despite these challenges, there are some signs of hope on the horizon. The European Central Bank’s (ECB) anticipated rate cuts could potentially ease some of the financial pressures on businesses by lowering borrowing costs. However, the impact of these cuts may not be immediately felt in the food service sector, which is more directly influenced by commodity prices and labour market dynamics.

In the meantime, businesses are exploring various strategies to mitigate the impact of inflation. Some are seeking to streamline operations, reduce waste, and renegotiate supplier contracts to control costs. Others are innovating their product offerings, focusing on value-driven menus that appeal to budget-conscious consumers.

As the Eurozone continues to navigate this period of economic uncertainty, the resilience of the food service sector will be tested. The ability of businesses to adapt to these inflationary pressures will be crucial in determining their long-term success in a challenging and rapidly changing environment.

EU To Apply Temporary €3 Duty On Low-Value Imports From Non-EU Countries

The European Union has begun applying a temporary customs duty of €3 per item on small parcels valued at up to €150 imported from third countries, in a move designed to curb unfair competition and tighten safety checks on e-commerce products.

A Temporary Measure Ahead Of A Wider Customs Overhaul

The levy, which took effect on 1 July, will remain in place until 2028, when the EU expects to complete a broader reform of its customs system. The policy primarily affects purchases from major Asian marketplaces such as Shein, Temu and AliExpress, although it may also apply to orders from other non-EU markets, including the United States and the United Kingdom, depending on the supplier.

How The Duty Is Calculated

The €3 charge is applied per product type within each parcel. In practical terms, that means a single order containing different categories of goods is taxed separately for each category.

For example, a parcel containing a shirt and a pair of shoes would face a total duty of €6. If the package contains multiple units of the same item, however, the charge remains €3 for that product type.

In another case, a parcel with four different products could incur €12 in duties alone. Larger baskets with multiple item categories could therefore see the final bill rise significantly before value-added tax is added.

Why Brussels Is Acting Now

The measure is aimed at the rapid growth in small cross-border e-commerce shipments arriving from outside the EU. In recent years, these flows have surged into the billions of parcels annually, with the majority originating in China.

According to the European Union, the previous regime of zero customs duties on parcels worth up to €150 created unfair conditions for European businesses, while also limiting the ability of authorities to carry out effective safety and compliance checks.

Officials also warn that many parcels entered the market with inaccurate value declarations or without sufficient scrutiny, increasing the risk of non-compliant or potentially dangerous products reaching consumers.

What It Means For Consumers And Platforms

Consumers should expect higher total costs on online purchases, particularly for low-value orders. A €20 basket, for instance, could easily climb above €25 or €30 depending on how many different products it includes.

In some cases, additional handling fees may be introduced later as part of the EU’s wider customs reform. For now, the main question is how platforms will respond: they may either absorb the cost or pass it on to shoppers.

Many large e-commerce providers already operate through the IOSS system, which streamlines the collection of VAT and duties at checkout.

The Next Phase Of Reform

The temporary duty is only one piece of a larger overhaul. The EU is also working to abolish the €150 threshold and replace it with a unified digital customs framework by 2028.

Under the new model, e-commerce platforms would be treated as “deemed importers,” taking on greater legal responsibility for the safety and compliance of the products they sell into the European market.

Aims: Fairer Competition And Stronger Protection

European authorities say the reform is intended both to protect consumers and to create a more level playing field for European companies.

Just as important, it is expected to make customs controls more efficient by reducing the volume of individual low-value parcels and improving the authorities’ ability to identify non-compliant goods at the border.

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