UK food price inflation of 15% is approaching, warns industry researcher

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A man buys fruit and vegetables at Brixton Market amid the spread of the coronavirus disease (COVID-19) in London, Britain September 27, 2020. REUTERS/Simon Dawson

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  • Vulnerable households will be hardest hit, says IGD
  • High levels of inflation will persist through 2023

LONDON, June 16 (Reuters) – Britain’s food price inflation is expected to peak at 15% this summer and remain at high levels through 2023, a leading food industry researcher warned on Thursday, wearing a another blow to the country’s treasury. cramped consumers.

In its latest report, the Institute of Grocery Distribution (IGD) said Britain’s most vulnerable households would be hardest hit by soaring food and drink prices.

Soaring prices are already causing the greatest pressure on household incomes since at least the 1950s in Britain, where grocery price inflation reached 7% in the four weeks to May 15, its highest level in 13 years, according to industry data.

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Britain’s official inflation rate hit a 40-year high of 9% in April and is expected to top 10% later in 2022, when regulated energy prices are set to rise another 40%.

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To fight inflation, the Bank of England is expected to raise interest rates on Thursday for the fifth time since December. Read more

However, this will mean higher mortgage costs for many households.

The IGD predicted that the average monthly grocery spend for a typical family of four would reach 439 pounds ($529) in January 2023, up from 396 pounds in January 2022.

He expects inflation to be most evident in the prices of meat, grain products, dairy products, fruits and vegetables, products that depend on wheat for animal feed, such as white meats, likely to see prices skyrocket in the short term.

PERSISTENT INFLATION

The researcher projects that high levels of food inflation will likely last through mid-2023, pointing to several factors including the impact of conflict in Ukraine, pre-existing supply chain challenges, limited efficiency of monetary and fiscal policy and the still-felt impacts of Brexit. .

“Based on our research, cost-of-living pressures are unlikely to ease any time soon,” said IGD chief economist James Walton. “We are already seeing households skipping meals – a clear indicator of dietary stress.”

Britain’s four biggest grocers, market leader Tesco (TSCO.L), Sainsbury’s (SBRY.L), Asda and Morrisons all declined to comment on the 15% figure.

In response to the crisis, Britons are slashing both stores and products, moving from traditional supermarkets to discounters and from branded goods to lower-priced private label products. Read more

They are also reducing their fuel purchases by reducing the number of car trips they take, canceling streaming services and voiding appliance repair warranties. Read more

Poundland owner Pepco (PCOP.WA) said last week that Britons were even limiting their spending on essentials. Read more

Tesco will provide an update on first quarter trading on Friday.

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Reporting by James Davey; Editing by Alex Richardson and Kim Coghill

Our standards: The Thomson Reuters Trust Principles.

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