Economists indicate a challenging future for UK food prices.
- Food inflation reached its peak at 19.2% but slightly decreased.
- Despite moderation, high food prices will persist, experts say.
- Shrinkflation affects popular brands, increasing price pressure.
- Lower income households drastically cut grocery spending.
The unprecedented rise in food prices in the United Kingdom signals a significant economic shift, as economists suggest that the affordable food era is over. In March, the Office for National Statistics reported that food inflation had reached a 45-year high at 19.2%. However, this number slightly decreased to 17.4% by June, marking a tentative moderation in inflation figures.
Despite the easing of food inflation rates, economists caution that the long-term trajectory of food prices remains upward. Retailers conveyed to the Bank of England that although food inflation may have peaked, prices are expected to increase annually at a rate of 10% by year-end. Barret Kupelian, a senior economist at PwC, asserted: “The bad news is that even though food inflation is expected to moderate, food prices will remain high and not decrease. This means that the era of cheap food has probably come to an end in the UK.”
Consumer habits have been forced to change, with many UK families, especially those from lower income households, struggling under the pressure of ongoing price hikes. An IGD analysis highlighted that 66% of lower income families are reducing their grocery expenditure, while over half are limiting their food and drink consumption at home compared to 36% of higher income households.
In response, supermarkets are attempting to alleviate consumer stress by passing on commodity price reductions as swiftly as possible. Notable decreases have been seen in categories such as dairy, bread, pasta, rice, fruit, vegetables, meat, and fish. However, despite these efforts, the phenomenon of shrinkflation is affecting consumers. Well-known brands have reduced product sizes; notably, Hellmann’s mayonnaise jars were reduced from 800g to 600g at Tesco.
The case of Arla Foods’ butter brand, Lurpak, further exemplifies shrinkflation, where a reduction of 20% brought 250g packs down to 200g for its salted, unsalted, and lighter varieties. This coupled with the fast rise of own-brand product prices, continues to challenge consumer budgets amidst a complex economic landscape.
The persistence of high food prices reflects a broader economic challenge that will continue to impact UK households.
