Food inflation could push annual grocery bills up by £275
Food inflation surged in June as the prices of dairy and fresh meat products skyrocketed.
Grocery price inflation hit its highest level since January 2024 at 5.2 per cent in the four weeks to 13 July, according to Kantar.
The average household spend at the grocers has now reached £5,283 a year, which could add £275 to bills “if people’s shopping habits stay the same”, Kantar added.
“Just under two thirds of households say they are very concerned about the cost of their grocery shopping, and people are adapting their habits to avoid the full impact of price rises,” Fraser McKevitt, head of retail and consumer insight at Worldpanel, said.
“Own label products, which are often cheaper, continue to be some of the big winners,” he added.
Food inflation reached 4.5 per cent in June, according to official government statistics, as farmers struggled with high costs amid tax rises and extreme weather.
Why is food inflation on the rise?
The increase in grocery inflation has been driven by the prices of fresh staples, such as butter, red meat, and chocolate.
“The pressure on food and drink manufacturers continues to build… rising costs are gradually making their way into the prices shoppers pay at the tills,” sustainability director at The Food and Drink Federation (FDF), Balwinder Dhoot, said.
These pressures include higher wage costs due to tax hikes in April, plus low yields due to extreme weather and a crucial shortage of carbon dioxide used in farming.
“Despite fierce competition between retailers, the ongoing impact of the last budget and poor harvests caused by the extreme weather have resulted in prices for consumers rising,” Kris Hamer, insight director at the British Retail Consortium, said.
The areas that the UK has traditionally relied on – livestock and arable crops – are under significant pressure.
Beef and lamb farming have both been suffering from falling cattle numbers and higher costs for feed, energy and transport.
A shortage of carbon dioxide, fuelled by the closure of ammonia plants – CO2 is a byproduct of the fertiliser production process – due to high energy costs, has also led to a slowdown in production on UK farms.