Food inflation has climbed to its highest level since the British Retail Consortium (BRC) began tracking the index in 2005, according to released data.
What has risen the most?
Food inflation is the sum of several different types of sectors. Overall food inflation in the UK reached 10.6% in September, up from 9.3% in August. This is the highest rate of inflation recorded in the food category since tracking began.
Annual growth in shop prices rose to 5.7% in September from 5.1% in August. This is another record high for shop price inflation since the index began tracking in 2005.
Inflation in the ambient food category also recorded its highest value at 8.6% for September, up from 7.8% in August.
For fresh food, inflation swelled to 12.1% from 10.5% in August, also the highest inflation rate recorded in this category.
Non-food inflation was also 3.3% for the month, slightly above the three-month average inflation rate of 3.1%. Non-food products include DIY, gardening, and similar products.
BRC chief executive Helen Dickinson OBE commented on the situation.
“With costs mounting across the board, September saw shop price inflation hit yet another high. The war in Ukraine continued to drive up the price of animal feed, fertilizer, and vegetable oil, causing fresh food inflation to rise significantly over the past few months, particularly for products such as margarine.”
She also added a comment on the plight of retailers.
“Retailers are battling huge cost pressures from the weak pound, rising energy bills, and global commodity prices, high transport costs, a tight labor market, and the cumulative burden of government-imposed costs. And, with business rates set to jump by 10% next April, squeezed retailers face an additional £800m in unaffordable tax rises. Government must urgently freeze the business rates multiplier to give retailers more scope to do more to help households.”
What is expected in the coming months?
The situation in the UK, as in other European countries, is beginning to be challenging for many businesses and households.
Energy prices are still rising and many countries are talking about capping energy prices to prevent households and businesses from getting into existential difficulties. There are differing views on the situation, and while Hungary is strongly opposed to energy capping, Poland reports that it has enough gas and coal for the winter.
Large European companies such as the German car manufacturer Mercedes are stockpiling parts due to fears of gas shortages. Their fears appear to be correct, as the current situation surrounding the Nord Stream 1 and Nord Stream 2 pipelines, which run along the bottom of the Baltic Sea from Russia to Europe, is bad. Following explosions and disruptions, gas is leaking from them into the sea and will certainly not be coming on stream any time soon.
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Commenting on the current situation in the UK, Mike Watkins, Head of Retail and Business Insight at NielsenIQ, said:
“With food and household energy prices continuing to rise, it’s no surprise that NielsenIQ data shows that 76% of consumers are saying they expect to be moderately or severely affected by the cost-of-living crisis over the next 3 months, up from 57% in the summer. So households will be looking for savings to help manage their personal finances this autumn and we expect shoppers to become more cautious about discretionary spend, adding to pressure in the retail sector.”
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