UK food prices see highest increase since 2008
Food prices in the UK rose by 5.1% in August, data from the British Retail Consortium (BRC) has revealed.
This is a 9.3% increase from the 4.4% recorded in July, and well above the three-month average rate of 4.1%.
In particular, fresh food prices inflated by 10.5% in August – a significant increase from 8.0% in July. The figure marks the highest level of food inflation seen since the financial crash in 2008.
Increases are in part down to the rise in the cost of fertiliser, wheat and vegetable oils – a result of the war between Russia and Ukraine where large amounts of these goods are produced, according to data from the BRC and market research group NielsenIQ.
The foods seeing the biggest influx in prices are milk, crisps, and margarine, says Helen Dickinson, Chief Executive of the BRC.
If prices continue to follow this trajectory, wider UK inflation could reach 18% in 2023 according to some economists at Citi.
Dickinson added: “The situation is bleak for both consumers and retailers, but retail businesses will remain committed to supporting their customers through offering discounts to vulnerable groups, expanding value ranges, fixing prices of essentials, and raising staff pay.
Retailers, however, can only do so much to manage the growing pressure of rising costs, she said.“The new Prime Minister will have an opportunity to relieve some of the cost burden bearing down on retailers, like the upcoming increase in business rates, in order to help retailers do more to help their customers.”
Recent data from the Barclaycard monthly Consumer Spending Index shows that British shoppers are adapting their shopping habits to account for rising costs. In-store transactions rose by 8.5% in July this year, with many consumers returning to the high street to have better control over their spending and avoid the unnecessary purchases they may be more likely to make online, the report says.
Amid overall inflation levels reaching 10.1% in July, Iceland launched a flexible credit solution to help its customers access short-term micro loans.
Supermarkets have also started planning how to support their workers during the winter ahead, with John Lewis & Partners announcing this week it would offer free meals to its workers over the Christmas period.
Mike Watkins, Head of Retailer and Business Insight at NielsenIQ said: “Inflation continues to accelerate and shoppers are already cautious about how much they spend on groceries, with a fall in volume sales at supermarkets in recent months.
“We can expect this level of food inflation to be with us for at least another six months but hopefully some of the input cost pressures in the supply chain will eventually start to ease.
“However, with further falls in disposable incomes coming this autumn as energy costs rocket again, retail spend will come under pressure in the all-important final quarter of the year.”
As the pressure of rising costs mounts, find out how the food industry can mitigate the worst effects in this Food Matters Live Podcast episode: