The era of cheap food in the UK is concluding as economists predict continued food price increases.
- Food inflation reached a 45-year high earlier this year, easing slightly but remaining significant.
- The cost of food is not expected to decrease despite a peak in inflation, underscores experts’ warnings.
- As expenses rise, lower-income households are compelled to reduce their grocery spending habits.
- Shrinkflation affects customers with products being downsized, while prices of own-brand goods rise most quickly.
Economists have sounded the alarm that the era of cheap food is drawing to a close in the UK. Food prices have been marked by a significant increase, with a 45-year high recorded by the Office for National Statistics at 19.2% in March, slightly easing to 17.4% by June. Despite this peak in inflation, prices are anticipated to rise continuously, with predictions of a 10% annual increase by year-end.
Senior economist Barret Kupelian from PwC emphasised the unwelcome reality: “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.” Retailers and experts alike acknowledge the situation, expecting inflated costs to persist.
As financial pressures grow, data reveals a stark impact on consumer behaviour, particularly among lower-income families. According to analysis by IGD, 66% of these households have already started to cut back on grocery spending. More than half are restricting food and drink consumption at home, a figure that contrasts with 36% among higher-income households. This highlights the disproportionately heavy burden on less affluent segments of society.
Supermarkets have pledged to quickly pass on reductions in commodity prices to benefit consumers, but challenges remain. Significant price cuts have been seen in key food categories including dairy, bread, pasta, rice, fruit, vegetables, meat, and fish. Nevertheless, as the Bank of England notes, the fastest increases have been observed in the prices of own-brand goods, alongside widespread shrinkflation in major branded products.
Examples of shrinkflation reveal the trend of reducing product sizes as a hidden method of price increase. Popular items such as Hellmann’s mayonnaise have downsized from 800g to 600g jars, and Arla Foods has reduced the size of its Lurpak butter by 20%, affecting its salted, unsalted, and lighter block varieties. These adjustments underline the subtle yet impactful strategies employed by brands to manage costs without overtly raising prices.
The sustained rise in food prices marks a significant economic shift, impacting consumers widely.
