The increase in food costs in U.K. is expected to continue and may only level out at 10% by the end of the year
The Chief Economist at the Bank of England – Huw Pill, has said that food prices will continue to remain high and may only slow to about 10% by the end of the year.
The price of food and non-alcoholic drinks rose by 17.4% in the year to June 2023. Over the last few months, the food inflation rate has gradually been dropping after hitting a high of 19.2% in March 2023.
This comes days after the Bank of England decided to raise interest rates for the 14th time in a row in a bid to increase the cost of borrowing, dampen demand and reduce the price rises. As of now, the inflation remains far above the Bank of England’s target of 2%.
Speaking on the occasion, Pill said, “Unfortunately, the days of seeing food prices fall, that does seem to be something that we may not be seeing for a little while yet, if in the future at all.”
The recent easing is because prices rose 0.4% between May and June 2023, compared with 1.2% in the same period in 2022. Prices in restaurants and cafes rose by 9.1% in the year to June 2023, down from 9.3% in May and a peak of 11.4% in February 2023. Around 47% of adults in Great Britain said they bought less food when shopping in the past two weeks. This was according to the latest Opinion and Lifestyle Survey, based on data collected between July 12 and 23, 2023.
According to a more detailed analysis from the survey covering the period February 8 to May 1, 2023, 1 in 20 adults (5%) said they had run out of food in the past 2 weeks and been unable to afford more. However, this figure was much higher among certain groups of the population.
Pill said that Russia’s invasion of Ukraine, leading to a blockade of exports from the Black Sea Port, has also added to the global food price rise. He also claimed that some firms had locked in higher prices when the war in Ukraine had first started, in the face of uncertainty, leading to higher prices on the shelves.
As per British Retail Consortium and Nielsen IQ, the overall shop prices were still 7.6% higher in July 2023 than the same time a year ago. It also warned of possible supply chain issues due to restrictions on the export of Non-Basmati rice from India. He said that the rising food and energy costs have been driving inflation over the last couple of years.
