Soaring beef and butter prices drive food inflation in June
Food inflation has risen to its highest level in nearly a year as farmers struggle with high costs amid tax rises and extreme weather.
Overall inflation was ahead of expectations in June at 3.6 per cent, but food and drink inflation continued to outpace the rest of the economy at 4.5 per cent.
This was the third consecutive increase in the rate. It is the highest recorded since February 2024.
Butter, chocolate and red meat have seen the highest price rises over the past year – butter is nearly 20 per cent more expensive.
“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.
UK food production faces roadblocks
Britain’s level of self-sufficiency — the amount of food we consume that is grown in this country — fell from a peak of 78 per cent back in 1984 to 62 per cent in 2023.
In May, a campaign group called Save British Farming gathered in front of Westminster to warn that “Ration books are coming”.
Asda came under fire in March for selling German chicken breasts, which it said was a temporary measure to meet a supply shortage, while Marks and Spencer’s has been selling Egyptian potatoes and Tesco has been selling spring onions from Senegal.
The areas that the UK has traditionally relied on – livestock and arable crops – are under significant pressure: The price of beef jumped by a fifth in June, as did the price of butter, while lamb prices rose 10 per cent.
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.
Extreme weather from biodiversity losses and environmental degradation, too, has been increasingly affecting the UK’s ability to grow certain types of food.
These issues have only been compounded by the recent increase in costs for UK farms as higher wage taxes start to bite.