UK food prices will fail to grow again next year in a further boost to consumers, according to a new forecast.
Food prices dropped 1.5 per cent in 2014 and are expected to fall again 3.1 per cent this year, Prestige Purchasing, a foodservice supply chain consultant, said today. Annual food price inflation had not been negative since the 1980s.
Prices will stay flat in 2016, and will be kept from increasing by a strong pound, which makes imports cheaper, and the Russian ban on EU food products which is expected to create an over-supply in Europe.
The EU placed economic sanctions on Russia last year in response to its involvement in the annexation of Crimea in Ukraine, which resulted in a Russia restricting imports from the EU.
Meanwhile, the pound has risen 10 per cent against the euro over the last 18 months, cutting the prices of imports from the Eurozone, the UK’s biggest trade partner. Low oil prices will also help.
Subdued wholesale food prices have been passed on to shoppers due to intense competition between retailers this year.
However, some foods are expected to climb in price. Drier-than-expected weather and the late application of pesticides has led to lower production volumes in Ghana – currently forecast to hit 850,000 tonnes rather than the million tonnes originally forecast.