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16 June 2022

Why the UK should prepare for a spike in food prices

Record-high food inflation could lead to more families on lower incomes skipping meals.

By Michael Goodier

Food price inflation is projected to reach its highest level since the beginning of the century this summer, when price rises so far this year have already led more households to miss meals.

The latest prediction by grocery analysts the Institute of Grocery Distribution (IGD) was that food price inflation would hit 15 per cent this summer due to soaring costs. The IGD said that the products with the most inflation were expected to be meat, cereal products, dairy, fruit and vegetables.

Rising food prices are likely to be felt disproportionately by the most vulnerable households, who spend a higher share of their budgets on food.

The war in Ukraine is the biggest cause of food price inflation. Russia and Ukraine jointly account for 27 per cent of global wheat exports and more than 60 per cent of the global sunflower oil supply. Products that rely on wheat for feed, such as white meats, are therefore likely to become more expensive as grain prices rise.

A rise in natural gas prices will drive up the costs of heating animals and greenhouses, while fertiliser, which is made from natural gas, has also become much more expensive. There is a shortage of seasonal agricultural workers, many of whom usually come from Ukraine, and packaging, too, has become more expensive because much of it relies on foil and wood pulp sourced from Russia.

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The rise in prices could lead many more lower-income households to skip meals. James Walton, chief economist at the IGD, said: “From our research, we’re unlikely to see the cost-of-living pressures easing anytime soon. This will undoubtedly leave many households, and the businesses serving them, looking to the future with considerable anxiety. 

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“If average food bills go up 10.9 per cent in a year, a family of four would need to find approximately £516 extra per year. We are already seeing households skipping meals, a clear indicator of food stress.”

[See also: How the UK sleepwalked into a food crisis]

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