UK food price inflation to be 9% in December, industry researcher cautions
13/07/2023 13:29
LONDON, July 13 (Reuters) - Food price inflation in
Britain will decline through the balance of 2023 but will still
be about 9% in December, a prominent grocery industry researcher
said on Thursday.
In its latest report, the Institute of Grocery Distribution
(IGD), whose forecasts on UK food inflation have proved to be
broadly accurate, cautioned it did not expect sales on a volume
basis to significantly recover until next year.
“We predict that food price inflation will slowly and
steadily decline over the remainder of 2023, reaching
approximately 9% by December," James Walton, IGD's chief
economist, said.
"Although food price inflation appears to have peaked in
March, widespread price cuts are unlikely at this time and a
depressed volume of sales is expected until March 2024.”
Prime Minister Rishi Sunak's pledge to halve overall
inflation in 2023, before a probable 2024 election, is under
threat from persistently high food inflation, which has added to
strain on household budgets already hit by interest rate rises.
In May, the Bank of England forecast overall inflation would
drop to just over 5% by the end of this year and below its 2%
target by early 2025, but some BoE policymakers have doubts
about the models used to make these forecasts and fear inflation
will be higher.
Food and drink inflation was 18.3% in May according to the
most recent official data, and 14.6% in June according to the
most recent industry data.
All of Britain's major grocers have recently cut the prices
of some staple products, such as milk, butter and bread.
However, both market leader Tesco TSCO.L and No. 2
Sainsbury's SBRY.L have cautioned that a permanent rise in
labour costs will mitigate the easing of commodity and energy
pressures.
The IGD's Walton also highlighted a shortage of labour in
the UK food and consumer goods industry.
“Labour pressures may be the industry’s Achilles’ heel,
driving costs while undermining capacity," he said.
The IGD report also highlighted increased pressure on those
with the lowest incomes, with 54% reducing the amount of food
and drink consumed at home compared to 36% with higher incomes.
EXPLAINER-Why is UK food inflation so stubbornly high?
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EXPLAINER-Why is UK food inflation so stubbornly high?
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Higher wages to temper UK food inflation fall, says Sainsbury's
boss urn:newsml:reuters.com:*:nL8N38Q26I
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(Reporting by James Davey, Editing by William Maclean)
((james.davey@thomsonreuters.com))