According to a report released by the British Retail Consortium (BRC) and Nielsen, food prices are predicted to exceed energy prices in driving UK inflation. The report suggests that a combination of Brexit-related uncertainty, weak sterling, and weather extremes have led to higher import costs and supply chain disruption, resulting in an upward pressure on food prices. This article examines the factors behind the predicted rise in food prices and the potential impact on consumers.
The impact of Brexit
Since the Brexit referendum in 2016, there has been a decline in the value of the pound against other major currencies such as the euro and dollar. This has led to an increase in the cost of importing food products, as the UK is heavily reliant on imports from other countries. In addition, the uncertainty surrounding Brexit negotiations has made it difficult for businesses to plan ahead, leading to supply chain disruptions and increased costs.
Furthermore, the potential impact of Brexit on the UK’s agricultural sector remains uncertain. If the UK leaves the EU without a deal, it may result in tariffs on farming exports and imports, leading to further price increases.
Overall, the Brexit-related factors are expected to contribute to rising food prices in the UK.
The UK has experienced extreme weather conditions in recent years, including heatwaves and heavy rainfall. These weather events have had an impact on the availability and quality of crops, leading to lower yields and increased costs for farmers and suppliers. For example, the heatwave of 2018 led to a shortage of lettuce and other vegetables, resulting in higher prices for consumers.
Climate change is expected to worsen these weather extremes, leading to further disruptions in the food supply chain and increased food prices.
Therefore, it is likely that weather extremes will continue to play a significant role in driving up food prices in the UK.
The role of energy prices
Energy prices have traditionally been a major driver of UK inflation. However, recent trends suggest that food prices are set to overtake energy prices in this regard. This is partly due to government policies aimed at reducing energy prices, such as the cap on standard variable tariffs introduced in January 2019.
Furthermore, the decline in oil prices in recent years has led to a decrease in energy costs. However, this has not been matched by a similar decline in food prices, leading to a relative increase in the cost of food products.
Therefore, while energy prices remain an important factor in UK inflation, the rising cost of food is likely to take precedence in the near future.
The impact on consumers
Rising food prices are likely to have a significant impact on UK consumers, particularly those on low incomes who are already struggling to make ends meet. According to the BRC and Nielsen report, food inflation is expected to rise to 2.5% in the coming months, compared to an average of 1.6% over the past decade.
This could lead to increased poverty and food insecurity, particularly among vulnerable groups such as children and the elderly. It may also result in changes in consumer behaviour, as people opt for cheaper, less nutritious food options.
The impact on businesses is also likely to be significant, particularly small independent retailers who may struggle to compete with larger supermarkets and online retailers. This could lead to job losses and a further decline in local high streets.
The predicted rise in food prices in the UK is a cause for concern, particularly given the potential impact on vulnerable groups and small businesses. While Brexit-related uncertainty and weather extremes are significant factors driving up food prices, government policies aimed at reducing energy costs may also be contributing to a relative increase in food prices. It is important for policymakers to take action to mitigate the impact of rising food prices and ensure that everyone has access to affordable, nutritious food.