UK supermarkets have been accused of keeping food prices “stubbornly high” despite falling costs, following yesterday’s inflation figures from The Office for National Statistics (ONS).
Overall inflation had been expected to fall below 10%, but soaring food and drink prices meant it fell by just 0.3 points in March, to 10.1%. Food and drink inflation had risen to 19.1% – the highest annual rate in over 45 years, with big jumps in prices for products including olive oil (49%), milk (38%) and ready meals (21%).
ONS chief economist Grant Fitzner said the drop in the price of oil and fuel had been “offset by the cost of food, which is still climbing steeply”.
“You would expect to see [global food price falls] reflected in supermarkets but we’re not there yet,” the retail industry body told the BBC.
The food industry has faced soaring costs in recent months, exacerbated by rising energy costs, ongoing vegetable supply shortages and an outbreak of avian flu, which affected the supply of eggs and poultry.
Prices for fruit, vegetables and sugar also rose as poor harvests in Europe and North Africa reduced availability and the weak pound made importing more expensive.
According to The Guardian, food prices have jumped about 25% in the past two years – the same level of price growth which had been seen over the previous 13 years. It revealed that the price of some essentials foods such as cheese and bread has soared by up to 80% over the past year.
McKinsey partner and global leader, Kevin Bright said: “Prices remain stubbornly high – we’ve only fallen back to January’s price inflation rate. In short – prices are continuing their steep upward trajectory.
“In spite of many global commodity prices easing dramatically over the last year, e.g., dairy, vegetable oil and cereals, we’re not seeing this trickle through into the price of products on the shelves.”
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“While households will be pleased to see that inflation may have passed its peak, prices are still high,” said chief executive Helen Dickinson.
“As food production costs peaked in October 2022, we expect consumer food prices to start coming down over the next few months.
“With food price inflation likely to slow in the coming months as we enter the UK growing season, we expect wider inflation will continue to ease. Nonetheless, prices for consumers will remain high, especially as household bill support is lifted.”
Food production and raw material costs have been steadily falling since October, with many pushing for the grocers to pass on lower food prices.
This has most recently been seen as Tesco kicked off a rush for grocers to reduce the price of milk as production costs fell, with boss Jason Tarry saying: “We’ve seen some cost price deflation for milk across the market in recent times, and we want to take this opportunity to pass that reduction on to customers.”
Simon Mellin, founder of milk delivery service The Modern Milkman, told the BBC he believes food prices will start to stabilise, but will remain at a much higher level than they were this time last year.
“I’m really unsure if food prices will drop as much as everyone expects,” he said.
“I expect some reductions but I wouldn’t personally expect huge reductions in the next twelve months.”
Conservative MP for the Cotswolds Sir Geoffrey Clifton-Brown said: “The price of wheat has fallen, for example, because a lot more grain is coming out of Ukraine by road and rail.
“That means that feed costs for livestock are coming down. That means the price of chicken, beef and lamb should come down.”
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