Higher wholesale prices for meat and tea have pushed up grocery prices at UK supermarkets, with warnings of more inflation ahead.
Food inflation increased to four per cent year-on-year in July, against growth of 3.7 per cent in June and above the three-month average of 3.5 per cent.
Fresh food rose in price by 3.2 per cent, while cupboard foods – which includes tea – rose by 5.1 per cent.
“Wholesale prices for [staples] have been hit by tighter global supplies,” Helen Dickinson, chief executive of the BRC, said.
“Families… have seen their food bills increase as food price inflation rose for the sixth consecutive month,” Dickinson added.
Pressures on the UK’s food supply 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.
“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.
Last week, a report linked the UK’s food prices with weather extremes that “exceeded all historical precedent prior to 2020”.
Household budgets ‘coming under pressure’
Data insights group Worldpanel has estimated that Brits’ average household spend at the grocers has now reached £5,283 a year, a figure which could rise by £275 by the end of the year.
“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.
Mike Watkins, head of retailer insight at NIQ, said: “Consumers’ household budgets are coming under pressure with the food retailers now seeing price increases above CPI.
“However, price competition helped by promotional activity will still mean that shoppers can save money by shopping around. With inflation on the up, high street retailers will also be concerned about customer retention over the summer holiday season if they are to maintain sales momentum.”