The SPD is calling for a “Germany Basket” that would significantly reduce the cost of groceries. This would involve lower prices for basic foodstuffs in stores and the establishment of a price monitoring agency. However, food prices are also rising due to the repeatedly increased minimum wage and the annually raised CO2 tax. The SPD, in particular, played a key role in politically implementing the minimum wage and driving the CO2 policy. These factors have a particularly strong impact on food prices.
Germany Basket: Relief on the shelves, but rising costs beforehand
The Germany Basket is intended to serve as a fixed basic offering, but its effectiveness depends on the cost realities of the supply chain. When wages rise, so do the costs in production, processing, and retail, because many jobs in these sectors are subject to minimum wage regulations. This applies to farms as well as to staff in retail stores. Furthermore, the CO2 tax impacts energy and fuels, meaning that price increases are reflected more quickly on store shelves. Following this logic, a basic food basket remains politically desirable but economically difficult to implement if food prices depend on these cost-driving factors.
The SPD also links the “Germany Basket” (a German-language product category) to rules against “deceptive packaging,” addressing concerns about shrinking fill quantities. However, the rule doesn’t change the cost basis; it primarily improves comparability. If companies incur higher costs, they will still adjust their prices. Therefore, the relief remains limited, even with the prominent placement of the “Germany Basket.”
Price Monitoring Agency: A Promise of Transparency with Side Effects
The planned price monitoring agency is intended to explain price formation “from the field to the supermarket shelf.” The SPD also aims to identify problematic trends earlier. For this, the agency needs data from production, industry, logistics, and retail. Companies must collect, validate, and share this data. This costs time and money because reporting and coordination are not free services. While a market monitor can clarify debates, it doesn’t guarantee cost reductions.
Transparency can be beneficial, but if it leads to mandatory reporting and auditing processes in practice, it will become even more expensive. Especially with food, many price fluctuations are driven by raw materials, energy, and labor. When price monitoring operates with high granularity, the data load increases. This also increases the likelihood of additional jobs being created in companies, which further drives up costs rather than reducing them.
Minimum wage and CO2 tax act as a permanent cost driver
The minimum wage has a particularly strong impact in this sector because many jobs in agriculture, processing, logistics, warehousing, and supermarkets fall precisely within this area. Every increase changes unit costs, and this change propagates through several stages. Thus, food prices rise not just at one point, but at many stages simultaneously. The CO2 tax also drives up costs because refrigeration, process heat, and transportation require a great deal of energy. Cold chains operate continuously, so the CO2 price is not just a theoretical effect, but a 24/7 reality.
The government can measure these cost effects, but it cannot eliminate them. When policymakers increase the minimum wage and the CO2 tax, they create price impulses. These impulses influence pricing more than individual actions by retailers.
Bureaucracy adds up, and the consumer ultimately foots the bill
The debate turns sour as soon as new reporting channels require additional staff, which is why concerns about a bureaucratic spiral are growing. Producers, processors, logistics companies, and markets would have to document more if the price monitoring agency is to provide reliable data. Retailers cannot finance these additional costs out of their own pockets, so logically, they end up in the final price of the goods. This also applies to manufacturers, who pass on their own reporting burdens via selling prices.
This creates a contradiction between the political goal and the economic mechanism. The “Germany Basket” is intended to provide relief, but the minimum wage, CO2 tax, and bureaucracy simultaneously raise the baseline, thus reducing the room for maneuver. If policymakers then intervene even more strongly, they move closer to price targets.
The “Germany Basket” fuels doubts about the SPD’s free-market compass
With the “Germany Basket,” the SPD wants to send a political signal, but the question of its understanding of economics remains central. Anyone who raises costs through minimum wage and CO2 taxes while simultaneously establishing a price monitoring agency with reporting obligations relies less on competition and more on bureaucracy. This casts doubt on a market-based approach, because prices are then more likely to be reduced through political intervention than through efficiency. If policymakers want to provide relief, they must first curb the cost drivers; otherwise, food prices will continue to rise. (KOB)