UK food prices soar to near six-year high amid Brexit fears
Food price inflation accelerated last month to 2.5%, up from 1.6% in February, the highest rate since November 2013, it said.
“The bad weather last year meant that many agricultural crops resulted in low yields and as a result, vegetables such as onions and cabbages are now more expensive,” said Liliana Danila, an economist at the BRC.
She added that increases in global cereal prices were being reflected in the price of bread and cereals on the shelf.
The figures:
- Food inflation accelerated in March to 2.5%, up from 1.6% in February. This is the highest inflation rate November 2013.
- Fresh Food inflation accelerated to 1.9% in March, up from 1.7% in February. This is the highest inflation rate since October 2017.
- Ambient Food inflation picked up in March, prices increasing by 3.4%, a significant increase on February’s rate of 1.5%. This is the highest inflation rate since February 2013.
Brexit concern clouds outlook
The BRC’s chief executive, Helen Dickinson, warned the bigger threat to food inflation remains the risks 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,” she said.
Assuming a smooth Brexit, Danila said that the BRC expects inflation to continue until mid-year after which it thinks inflation is going to retreat. “In the event of a no-deal Brexit, inflation is likely to increase since leaving without a deal makes sterling depreciation and cost increases from extra regulatory checks, more likely.”
The UK food industry is especially concerned about the impact of a no-deal Brexit, which could cost it €1.3bn.
The chair of the Food and Drink Federation, Ian Wright, this week told BBC1’s Breakfast show he was “terrified” of the prospect of a no-deal Brexit.
“The real problem here is that the disruption that we would have from no deal would very quickly lead to empty shelves, it would lead to more expensive products, and it would lead to a real diminution of choice – particularly for people in poorer areas and at the end of distribution chains,” he said.
“I’m absolutely terrified of the prospects for our economy and our food and drink industry by the prospect of tariffs. It will cause enormous amounts of disruption and enormous amounts of difficulty.”
Speaking about the BRC’s inflation figures, Mike Watkins, Head of Retailer and Business Insight at Nielsen, said: "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."
