Food prices in supermarkets have been pushed up by the fallout from the Russia-Ukraine war, Brexit and Covid-19
How much have food prices increased in the most important product categories – and will they continue to increase?
How much have the prices for food and drinks changed?
While this is less than the overall CPI increase of 7%, gains in many key categories have outpaced this increase.
- Pasta: A key staple of British dishes, pasta and couscous saw prices rise 10.1% yoy after already rising 14.9% in January 2022 due to the poor wheat harvest in 2021.
- Meat and dairy products: Meat has generally increased in price, with lamb (16.9%), beef (8.6%) and poultry (7.3%) recording large price increases. Milk, cheese and eggs (8.6%) and butter (9.6%) have also seen hikes. These increases are likely due to farmers facing rising production costs as fertilizer prices have risen since last summer and feed and fuel prices have soared as a result of the Russian invasion of Ukraine.
- Oils and fats: The hardest-hit category, oils and fats, saw an 18.1% increase versus a 34.8% increase in the margarine and vegetable fats subcategory – a change spurred by the war in Ukraine. Russia and Ukraine produce around 55% of the world’s sunflower oil and are also major exporters of rapeseed oil, with fears of shortages prompting markets to seek other vegetable oils – boosting demand and prices. Because they’re also key ingredients in many foods, such as mayonnaise and chips, the prices of other foods could rise accordingly. For example, sauces and condiments have already increased in price by 11.4%.
Other major food categories have not been affected to the same extent since at least March 2022.
Fruit prices are up 5.4% from March 2021 – although that means a 0.8% month-on-month drop and a 1.5% drop since January 2022.
Vegetables and potatoes are 4.8% more expensive than last year, but 1.2% less than in December 2021.
And the price of rice, a key bread and grain subcategory, is up 3.9% from last March. However, prices in March 2021 are down 6.8% year-on-year, meaning consumers are still not paying what they paid two years ago.
The British Retail Consortium (BRC), which represents most of the UK’s major supermarket chains, and data analysis company Nielsen run a store price index that includes a basket of 250 essential food and drink items and a further 250 essential non-food items.
This gauge suggested that as of March 2022, the price of staple foods rose by 3.3% yoy – a slower rate than the ONS CPI.
“Retailers are trying to help consumers by widening their price ranges and doing whatever they can to keep prices down on essentials,” said Helen Dickinson, CEO of BRC.
Will food prices continue to rise this year?
While Helen Dickinson said retailers are doing their best to keep prices down, she suggested increases in household grocery bills could be on the way.
“Consumer confidence has fallen significantly in recent months as concerns about personal finances mount. Households are faced with a plethora of rising costs and higher inflation to come as the hike in the energy price cap pushes April numbers higher. Retailers are not exempt from this pressure as the costs of transportation, energy, raw materials and staff wages continue to rise,” she said.
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.
The biggest issues related to the conflict are fuel prices and Availability and cost of fertilizers – both of which will continue to hamper farmers given the importance of Russia and Ukraine to global supplies.
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.”
But the problem seems to extend beyond the cost of living crisis, with a survey by food industry campaign Veg Power for healthy eating found that 26% of families and 49% of households earning less than £30,000 a year have less fresh food due to food prices Vegetables buy increases from February 2022, when the cost increases were not so obvious.