The price of food rose at its fastest rate since 2008 in August as pressure from the war in Ukraine continued to push up costs, figures show. And we can expect to see prices continuing to rise at similar rate for at least the next six months, say experts.
Shop price annual inflation surged to 5.1%, up from 4.4% in July, marking a new record since the British Retail Consortium (BRC) and NielsenIQ index started in 2005. The overall figure was driven by food inflation accelerating to 9.3%, up from 7% last month – the highest rate since August 2008.
It comes as the war in Ukraine and consequent rise in the price of animal feed, fertiliser, wheat and vegetable oils placed mounting pressure on prices. The annual increase in fresh food prices jumped to 10.5%, up from 8% in July, with products such as milk and margarine seeing the biggest rises.
The rise in shop prices is contributing to wider UK inflation, which some analysts are predicting could top 18% in 2023. BRC chief executive Helen Dickinson said: “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 at 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 six 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.”
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