Food prices in the UK’s upscale grocery markets have been pushed up by the Russia-Ukraine war, Brexit and Covid-19
One of the biggest challenges facing households is soaring food prices, with the ONS pointing out that they are a major contributor to the rise in the consumer price index (CPI) and the Bank of England calling them “apocalyptic”.
How much have food prices increased in the most important product categories – and will they continue to increase?
How much have the prices of food and drinks changed?
While this is less than the overall CPI increase of 9%, gains in many key categories have outpaced this increase.
Based on surveys conducted by the ONS, the ONS estimated that 92% of Britons saw their grocery bills increase, while 39% of adults reduced their grocery purchases.
- Pasta: A key staple of British dishes, pasta and couscous saw prices rise 10.4% yoy after already rising 14.9% in January due to the poor wheat harvest in 2021.
- Meat: Meat has risen in price across the board, with lamb (14.3%), beef (10.2%) and poultry (10.1%) all seeing large price increases.
- Dairy: Milk, cheese and eggs (9.5%) and butter (12.5%) have also seen hikes. These increases (along with those for meat) come as farmers have faced rising production costs, with fertilizer, feed and fuel prices rising sharply as a result of the Russian invasion of Ukraine.
- Oils and fats: This category saw a 14.5% increase versus a 22.7% increase in the margarine and vegetable fats subcategory – a change spurred by the war in Ukraine. Shortages have already been identified in supermarkets, as Russia and Ukraine produce around 55% of the world’s sunflower oil and are also major exporters of rapeseed oil. These oils are key ingredients in many foods, so their scarcity is driving prices up across the board (e.g. sauces and condiments prices are up 13.3%).
Other major food categories have not been affected to the same extent since at least April 2022.
Fruit prices are up 6.2% from April 2021 – although this is 0.7% below January 2022 prices.
Vegetables and potatoes are 4.6% more expensive than last year, but 1.4% lower than in December 2021.
And the price of rice, a key subcategory in the breads and cereals space, is 3.4% higher than last April — although prices in March 2021 are down 6.8% year-on-year, meaning consumers are always still not pay what they were doing two years ago.
The ONS has itself conducted an analysis of how the prices of 30 key value foods bought online from supermarkets by the UK’s poorest households have changed.
On May 30, it reported that value pasta prices rose 50% between April 2021 and April 2022.
Chips (17%), bread (16%), ground beef (16%) and rice (15%) also saw significant price increases over the year.
On the other hand, prices fell for potatoes (14%), cheese (7%), pizza (4%), fries (3%), sausages (3%) and apples (1%).
Meanwhile, the British Retail Consortium (BRC), which represents most of the UK’s major supermarket chains, and data analytics firm Nielsen run a store price index using a basket of 250 essential food and drink items and a further 250 essential non-food items.
This gauge suggested that as of April 2022, the price of staple foods rose 3.5% yoy and 0.2% mom – the highest rate of inflation recorded by this metric since March 2013.
While fresh groceries fell 0.1% in price to 3.4% yoy, ambient groceries rose 0.5% to 3.5% mom.
BRC CEO Helen Dickinson said the fall in fresh food prices was the result of “tough competition” between supermarkets.
Will food prices continue to rise this year?
Helen Dickinson has warned that higher food costs would still “filter through the supply chain” to “put further upward pressure on UK food prices in the coming months”.
“Retailers will continue to do everything they can to keep prices down and add value to their customers by limiting price increases and widening their price ranges, but this will put them under pressure to find cost savings elsewhere,” explained Ms Dickinson.
“Unfortunately, customers should brace themselves for further price increases and a bumpy road.”
Although the UK does not depend on Eastern Europe for much of its food supply, global price shocks resulting from the war in Ukraine are likely to push bills further.
Fuel is also an important issue for supply chains that move food from A to B.
While Russia and Ukraine play a major role in driving food prices higher, the UK also has its own specific challenges that are expected to drive up costs further.
Why are these food price hikes a problem?
The big problem with rising food prices is that they don’t happen in isolation.
All of these things will “increase the pressure on families in the coming months,” says Indu Gurung, deputy project manager of the Food Foundation’s Peas Please vegetable campaign.
“The escalating cost of living crisis is making it increasingly difficult for many families in the UK to afford the groceries they need.
“The Chancellor’s spring declaration contained a number of measures intended to ease the pressure on the cost of living. However, these measures are not enough to protect the most vulnerable families from food insecurity and ensure everyone has access to adequate nutritious food.
“Everything indicates that without substantial government intervention, the cost of living will continue to deteriorate.”
However, problems with food costs date back to the current squeeze crisis.
A food industry-led healthy eating campaign, Veg Power, covering the year to February 2022 found that 26% of families and 49% of households with an annual income of less than £30,000 were buying fewer fresh vegetables due to increased food prices.
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