Food Price Inflation Reaches New Highs In August And Predictions Do Not Make For Good Reading

31st August 2022

Everyone who shops can see it for themselves as figures for August 2002 show shop price inflation increased and for the price of food at its fastest rate since 2008.

The British Retail Consortium shows shop price annual inflation surged to 5.1 per cent, up from 4.4 per cent in July.

The highest rate since august 2008 is reflected in food inflation rising to 9.3 per cent, up from 7 per cent last month. The war in Ukraine and subsequent rise in the price of animal feed, fertiliser, wheat and vegetable oils have pushed prices higher.

The annual increase in fresh food prices spiralled to 10.5 per cent, up from 8 per cent in July, with products such as milk and margarine having the biggest rises.

The rise in shop prices is contributing to UK inflation, and some analysts are predicting 18 or even 20 per cent in 2023.

Food price inflation may keep rising for at least another six months.

Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said, "Mounting cost pressures up and down supply chains meant shop price inflation hit a new high in August. The war in Ukraine, and consequent rise in the price of animal feed, fertiliser, wheat and vegetable oils continued to push up food prices. Fresh food inflation in particular, surged to its highest level since 2008, and products such as milk, margarine and crisps saw the biggest rises."

“The rise in shop prices is playing into wider UK inflation, which some analysts are predicting could top 18% in 2023. The situation is bleak for both consumers and retailers, but retail businesses will remain committed to supporting their customers through offering discounts to vulnerable groups, expanding value ranges, fixing prices of essentials, and raising staff pay. However, as retailers also grapple with growing cost pressures, there is only so much they can shoulder. The new Prime Minister will have an opportunity to relieve some of the cost burden bearing down on retailers, like the upcoming increase in business rates, in order to help retailers do more to help their customers.”

Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, said, “Inflation continues to accelerate and shoppers are already cautious about how much they spend on groceries, with a fall in volume sales at supermarkets in recent months. We can expect this level of food inflation to be with us for at least another 6 months but hopefully some of the input cost pressures in the supply chain will eventually start to ease. However, with further falls in disposable incomes coming this autumn as energy costs rocket again, retail spend will come under pressure in the all-important final quarter of the year.”​

“Inflation continues to accelerate and shoppers are already cautious about how much they spend on groceries, with a fall in volume sales at supermarkets in recent months. We can expect this level of food inflation to be with us for at least another 6 months but hopefully some of the input cost pressures in the supply chain will eventually start to ease. However, with further falls in disposable incomes coming this autumn as energy costs rocket again, retail spend will come under pressure in the all-important final quarter of the year.”