Food prices hit by commodity costs and weather

By Helen Gilbert

- Last updated on GMT

The price of onions and other crops has soared due to inclement weather in 2018 hitting crop yields
The price of onions and other crops has soared due to inclement weather in 2018 hitting crop yields
Retail food costs have jumped by their highest rate in more than five years, according to latest figures from the British Retail Consortium (BRC)-Nielsen Shop Price Index.

Food inflation rose to 2.5% last month, up from 1.6% in February – the fastest rate of growth since November 2013 – while overall shop price inflation increased from 0.7% in February to 0.9% in March.

Adverse weather events, including the Beast from the East – which delayed planting of some UK crops, flooding and scorching summer weather, as well as global commodity prices were all cited as reasons for the surge. 

Rises in global cereal prices helped push up the cost of bread and cereals, while UK-grown potatoes, onions and cabbages were more expensive due to 2018’s inclement weather, which reduced crop yields. 

Fresh food

Other findings revealed that fresh food inflation had accelerated to 1.9% in March, up from 1.7% in February. Ambient food inflation soared by 3.4%, a significant increase on February’s rate of 1.5% and the fastest rate of growth in six years.

Helen Dickinson, British Retail Consortium chief executive, said the rise in shop price inflation was driven primarily by a sharp spike in non-perishable food inflation. “Increases in global commodity prices and adverse weather events put upward pressures on the wholesale prices of many foodstuffs which, coupled with rises in the cost of alcoholic and non-alcoholic beverages, pushed food inflation from 1.6% in February to 2.5% in March,”​ she said.

“Nonetheless, the bigger threat to food inflation remains the risk of a chaotic no-deal Brexit, which would lead to higher prices and less choice on the shelves. In order to avoid this scenario, parliamentarians from all parties must find a compromise that can command a majority in the House of Commons.” 

Ambient

Mike Watkins, head of retailer and business Insight at Nielsen, added: "The upwards pressure on pricing continues across food retailing – and a key driver this month was inflation in ambient food and drink. 

“With shoppers looking to stretch their budget for the weekly grocery shop, this will not help volume growth, which has been slowing since the start of the year. For many high street fashion, home and outdoor retailers, prices are not increasing, so good news for shoppers as the end-of-season ranges sell through."

The news comes as Britain’s most senior civil servant Sir Mark Sedwill privately warned cabinet ministers that leaving the EU without a deal would result in food prices rising by 10%. The 14-page briefing, obtained by the Daily Mail​, also stated that a no-deal would result in the collapse of some businesses that trade with the EU. 

Related topics: Supply Chain, Retailing Crisis

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