Around 6:30 PM, a family with restless children waits in line at a discount supermarket. A young couple places a bag of potatoes – currently on sale – onto the conveyor belt. Behind them stand men, some in fine wool coats, others in worn work jackets. A young woman adds three cans of corn and a pastry to her order. Beep. €3.56. A parent with two children has a full cart: a six-pack of water, a head of lettuce, six pizzas, meat, and more food and drinks. Beep. Almost €75. The man at the next checkout has already rung up over €65, and his cart is only half full.
Many customers likely leave the store with the same feeling: everything has become incredibly expensive.
While the rate of price increases appears to have slowed recently, with overall inflation at 2.3 percent and food prices 1.2 percent above the previous year in November 2025 – levels not seen since early 2025 – the burden remains high. Between December 2019 and November 2025, food prices climbed 37.9 percent, a far cry from the lower prices seen before the pandemic.
Prices Impact Mood
This increase is weighing on consumers. A recent Forsa poll commissioned by consumer protection agencies found that 58 percent of people are worried about rising living costs and their household’s financial situation. The biggest concern for the majority is the price of food. Over two-thirds of those surveyed said they feel the increase in food prices the most, compared to only 16 percent citing energy costs and a mere 4 percent mentioning transportation expenses.
Another Forsa and consumer agency survey revealed that nearly half of respondents are restricting their purchases at supermarkets and discount stores due to rising food prices. For many, grocery shopping has become a daily worry.
This situation is a departure from Germany’s long-held reputation as having some of the most affordable food in industrialized nations. Neighbors from Belgium and Luxembourg would often cross the border specifically to take advantage of lower prices.
Today, Four Companies Dominate the Market
Germany’s historically low prices have roots in the 1960s, when the Albrecht brothers founded Aldi, pioneering the discount principle: a limited product range at low prices. This revolutionized German retail and continues to shape it today, even as discounters expand their offerings to include organic and plant-based products, attracting a wider customer base. Today, shoppers from all income levels frequent discount stores.
The German food market is now dominated by just four retail groups: discounter Aldi, the Schwarz Group (which includes Kaufland and discounter Lidl), and supermarket chains Rewe and Edeka with their respective discounters Penny and Netto. Together, they control the majority of the market, a structure economists call an oligopoly.
However, these companies haven’t rested on their laurels. For a long time, they engaged in fierce price competition, further consolidating the market. This is reflected in the list of companies that have disappeared from the market since the “Aldisierung” – Plus, Real, Tengelmann – some acquired by the larger players, others simply vanishing. Even the world’s largest retailer, Walmart, was forced to concede defeat to discounters in Germany in 2006.
Less for the Same Money
This intense competition once benefited consumers, resulting in some of the lowest prices in Europe. When Aldi lowered the price of potatoes to one euro, Lidl quickly followed with 99 cents. “The discounters are engaged in a price war after another, and food has become almost ridiculously cheap,” one major weekly newspaper wrote in 2010.
Those days are gone. Today, shoppers get significantly less for their money. Despite the market structure remaining largely the same – the same providers competing for the same customers – prices are no longer low. This raises the question: is competition in the German food retail sector still effectively keeping prices down?
The Monopolkommission (Federal Cartel Office) addressed this issue in a much-discussed special report at the end of 2025, prompted by the sharp rise in food prices. The commission sought to determine whether these price increases were solely due to rising energy and raw material costs, as supermarkets often claim.
Margins for Traders and Manufacturers are Increasing
The commission’s findings are unsettling for both retailers and consumers: the market power of retailers has grown recently. The four major trading companies now control around 85 percent of the market, making it even more difficult for new providers to enter.
Most notably, the commission found that the margins of retailers and manufacturers have been rising in parallel with increasing market concentration for over a decade. At the same time, consumer prices in Germany have risen more sharply than in many other EU countries. “The power of food retailers and, in some cases, manufacturers has clearly increased at the expense of consumers,” says commission chairman Tomaso Duso. The high market concentration and rising price markups are “worrying.”
However, the picture isn’t entirely clear. The Thünen Institute, a state agricultural research institution, has also studied food prices and published a price monitoring report. “The analyses themselves don’t come to such different conclusions, but the interpretations differ,” says Anne Margarian of the Thünen Institute, who is responsible for the monitoring.
“No Special Development in the Food Industry”
While food prices in Germany have risen more sharply in recent years than in other European countries, this ignores the low starting level. The institute also notes rising margins, but across the entire manufacturing sector. “We therefore see no special development in the food industry, which confirms that it is more of a recovery than an effect of increasing market power.”
The report does not substantiate claims of abuse of market power by companies in the food industry or retail sector. This doesn’t mean it doesn’t happen, but the institute finds the commission’s results have been overinterpreted in public discussion.
Unsurprisingly, German food retailers claim that competition is “extremely good,” according to Edeka. The “intense competition in German food retail” prevents companies from increasing margins at the expense of customers.
Lidl argues that it invested heavily in price reductions last year, lowering the price of butter eight times in 2025 alone. “We also significantly reduced prices on other everyday essentials such as pasta, salmon, rice, juices, dairy products, and baked goods in 2025.”
But why do customers barely notice these individual price reductions?
This is due to psychology and mathematics. “Rising prices are more memorable than falling prices,” says Karsten Sandhop of the Federal Statistical Office. Many compare prices not to the previous year, but to longer periods, such as before the coronavirus pandemic – when prices were significantly lower.
The second point is simply a basket effect. Stephan Rüschen has studied the price wars of retailers. Having once worked in the food retail sector, he is now a professor at the Baden-Württemberg Cooperative State University in Heilbronn. While supermarkets lowering prices on some items may make a big difference for that specific product, it has little impact on the overall shopping basket. “Consumers notice very little from individual price reductions.”
This leads to another accusation: that food retailers have very similar prices everywhere. Rüschen is familiar with this. He recently received the comment from a viewer on a TV show where he appeared as an expert. His response: “Why do you feel cheated? That’s actually a positive message. If one retailer loudly announces that they are lowering the price of butter, you can be sure that the other retailer will do the same the next day.” This is a sign of particularly good competition.
For the time being, this offers little comfort to people at the checkout. “Quite expensive.” The cashier simply replies, “Do you have the Lidl app?” It doesn’t help; even with the customer app, it’s only 14 cents off a carton of milk. The price remains high.
Frequently Asked Questions
What is driving up food prices in Germany?
According to the source, rising energy and raw material costs are cited by supermarkets, but the Monopolkommission suggests that increasing market power of retailers and manufacturers is also a significant factor.
How concentrated is the German food retail market?
The source states that four trading groups – Aldi, the Schwarz Group (Kaufland and Lidl), Rewe, and Edeka – control around 85 percent of the market.
Are price reductions by retailers noticeable to consumers?
The source explains that individual price reductions are often overshadowed by the overall increase in prices and the psychological effect of remembering price increases more vividly than decreases.
What role do you think consumer behavior and expectations play in the current food price situation?
