An insecure Christmas: food and beverage shortages and inflation hit the festive season
As we reach the second year celebrating Christmas in a pandemic, food shortages and inflation are becoming more apparent globally.
A recent report from the World Bank shows that domestic food prices are on the rise worldwide. In September of this year, the poorest countries reportedly saw the highest rise in food price increase since the start of the pandemic. Vegetable prices in particular are rising at extortionate rates, especially in Turkey and Sri Lanka, according to the UN’s Food and Agricultural Organisation. The FAO also said that rice and wheat flour prices were already reaching sky-high levels in October. The main risks to food security internationally the World Bank says are the increase in retail prices, fertiliser prices, the reduction in value of some currencies, and reduced incomes, which make it harder for households to reduce the amount of food they buy.
Alongside inflation, food shortages have also increased in countries such as Germany. With the increase in price in artificial fertiliser, as well as a general lack of energy and fuel being available across Europe, the agricultural industry is suffering.
The UK is also witnessing the impact of both issues, but will it affect Christmas this year, just as people are beginning to get into the swing of preparations?
In the UK, grocery prices already rose to the highest rates since August 2020. When inflation was measured by brand consulting group Kantar in October this year it was recorded as being at 1.5%. The highest inflation at this point was seen in savoury snacks, canned colas and crisps across 10 major supermarket retailers. Their latest supermarket share data from the start of December also highlights that the average price of Christmas dinner for four is now at £27.48, which is 3.4% more than it was in 2020.
Recent analysis from the Centre for Economics and Business Research (CEBR) and the BBC’s Panorama is also predicting further increases. They suggest that by Christmas, inflation rates might reach as much as 4.6%. This year, a family of two adults and children is expected to spend £33.60 more than they would have spent last December because of rising inflation rates, which add an extra £1,700 per year to grocery spending.
The CEBR have also collected specific data on price differences this Christmas for commonly bought items at this time of year. Within their research the most popular festive items which have had a price increase include:
- Turkey +1.3%
- Cranberry sauce: +0.9%
- Stuffing: 0.7%
- Christmas pudding: 0.5%
The price of other staples including brussels sprouts, mince pies, and pigs and blankets are predicted to slightly decrease.
Other more general items increasing in price, which can still be popular around the festive period include:
- Margarine +15.6%
- Butter +6.4%
- Lamb +8.5%
- Crisps +6.9%
- Pork +3.3%
The increase in price is primarily because of rising fuel and energy prices, says the CEBR. The termination of Government support to businesses in the pandemic is also to blame, according to the BBC, as well as the reduced amount of lorry drivers and hospitality staff. This is due to both Covid as well as Brexit, which is making it difficult for a lot of EU national lorry drivers to stay in the UK.
CEBR research also notes that supermarkets are trying to maintain regular price levels during the festive period, due to it being one of the busiest retail moments in the year.
Experts say however that spending on groceries is expected to increase even further in spring 2022 says the CEBR.
Not quite the right trimmings
Part of the reasoning behind this inflation in food prices this year is also down to shortages of common Christmas foods and drinks on the shelves, which has affected the variety on offer across UK food retailers.
Most supermarkets have been quick to respond with information about how they will be stocking enough products for their customers this year, encouraging them to order ahead from their wide selections online to avoid disappointment.
However, the increase in shortages in the UK is clear from recent data from the ONS. 26% of Londoners have been unable to buy essential food items – a 6% increase since the last data study in October. 20% of the population in England have also had to spend more to get what they want from the supermarket. 44% in the country have said they have seen less variety available when doing food shops, while 40% in Wales and Scotland also had the same experience.
Real time sales research from the shopping technology platform Adimo, the number of out-of-stock items has grown quicker this year than during the peak periods of the pandemic in 2020. Shortages have been reportedly growing at an average of 10.3% a month over a three-month period.
CEO of Adimo, Richard Kelly explains in a statement: “UK shoppers may need to get used to the idea that their weekly and indeed Christmas shop will need to be made up of second and third, rather than first choices. Furthermore, a lack of choice and rising supply chain costs will all affect the price customers have to pay for their weekly or Christmas shop, which may be a bitter pill for shoppers to swallow if they’re not even getting what they want in the first place.”
Adimo’s research also shows that the top 20 areas in England experiencing stock shortages are also some the most deprived, according to The English Indices of Deprivation report, created by the Ministry of Housing, Communities and Local Government.
Helen Dickinson, Chief Executive of the British Retail Consortium also agrees that shortages will be more visible this year in supermarkets. She said: “While retailers are putting in a gargantuan effort to ensure that essential food and gifts are ready for Christmas, they continue to be dogged by ongoing challenges supply chain problems. Labour shortages throughout the supply chains – from farms to distribution – are pushing up costs and creating some gaps on the shelves.
Variety in types of Christmas meats including turkey could be in shorter supply according to data released last month by the ONS with Kantar. Their research showed that shelf availability was at the lowest level for frozen turkeys, which were noted as featuring in the ‘none’ or ‘low’ categories. Chocolate selection boxes had the second most common product to be in the “none” section.
A spokesperson from the British Meat Association told us: “Britain’s meat processing industry has suffered deteriorating capacity and morale as a result of the chronic labour shortage.
“The Government doesn’t understand the current makeup of the UK labour market, which has undergone a huge structural change since Brexit and Covid began taking effect.”
The shortages in bigger retailers have meant smaller independent retailers such as butchers have seen an increase in new consumers: Tony Hindhaugh, Director of London-based Parsons Nose butchers, told Food Matters Live: “As a leading high street butcher we have seen a greater interest and increased trade compared to pre-lockdown when the high street was definitely on the backward foot.”
With issues in the supply chain having driven up prices of turkey, main course meat choices have also changed, according to Tony. “While we have seen better than expected sales in turkey this year and it is still the clear winner, more people are ordering organic meat, our beef wellington is the second most popular item and pork is proving to be very popular this year, with some of the big roasting joints [being] a common alternative to turkey.”
Supply chain problems have also impacted the wine and spirit trade. At the end of November, 49 wine and spirit companies in the UK signed a letter from the Wine and Spirit Trade Association. They were asking for the Transport Secretary to take urgent action on the HGV driver shortages and freight disruption in a bid to prevent shortages of popular festive drinks in supermarkets this Christmas.
Drinks orders which would usually take between two and three days for businesses are now taking 15 days to process according to the WSTA. Orders of wines and spirits are also now costing approximately 7% more than normal, due to driver retention. This makes life complicated for smaller and medium size enterprises who might struggle to compete with bigger businesses to attract drivers.
Chief Executive of the Wine and Spirit Trade Association, Miles Beale said in a statement: “We are already seeing major delays on wine and spirit delivery times which is pushing up costs and limiting the range of products available to UK consumers. Government needs to be doing all it can to ensure British business is not operating with one hand tied behind its back over the festive season and beyond.”
Is Christmas cancelled?
Not quite. As food shortage issues had already been noticed in the late summer and early autumn months, retailers have tried to plan as much as possible in advance to avoid a lack of supply for Christmas consumers. Regardless of their efforts however, many food suppliers have not been able to offer the same range of goods that are usually expected around this time of year in the UK.
Helen Dickinson comments: “[…] retailers are prioritising Christmas essentials, and many have laid out their festive offerings a little earlier to ensure everyone has time to buy treats and decorations before the big day.
“[They] are hopeful that demand will continue right through the golden quarter, however, challenges remain, with higher prices looming and many households facing rising energy bills.”
The issues with supply will only be tackled if the shortages of drivers are also managed, according to the BMA. “The kind of experienced workers we need simply don’t exist in the UK right now and it will take the next two years to recruit and train British people,” the spokesperson says.
“Government needs to review the level of English required of migrant workers. Currently, it’s around A Level standard which is an unnecessary barrier for those seeking a job that requires more manual skill. This would be true of British workers as well. There’s also no mention of food processing in the new T Courses announced recently, and food barely appears in the National Curriculum.
“This is a two-year re-balancing exercise, not a quick fix before Christmas and, come New Year’s Day, this labour crisis will still be strangling the British food industry.”
For many, while shortages may not mean they will struggle to find food for Christmas dinner, a lack of variety means people may not get everything they want on their shopping lists. With inflation levels predicted to rise past December, this Christmas could be more about cutting down on extravagance and indulgence to keep everyday life affordable.