Food inflation is set to hit its highest level in more than 20 years this summer, reaching a peak of up to 15 per cent, IGD has said in a new report.
The latest Viewpoint Special Report – Exploring the outlook for food inflation – released today (June 16) notes that the rise in the cost of essential food items is likely hit the most vulnerable households hardest, with monthly food bills set to rise by another £43 per month for a typical family of four.
“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,” James Walton, Chief Economist, IGD, said.
“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 indictor of food stress.”
IGD has calculated that the average monthly spend on groceries for a typical family of four will reach £439 in January 2023 – a significant increase from £396 in January 2022.
IGD has warned that the UK economy is facing its strongest period of inflationary pressure since the 1970s. It also expects food inflation to persist for longer than official forecasters due to several factors, including the impact of the war in Ukraine, pre-existing supply chain challenges and the limited effectiveness of monetary and fiscal policy.
“We expect the mood of shoppers to remain bleak for the foreseeable future as they are impacted by rising inflation and a decline in real wages. Shoppers are likely to dial up money-saving tactics as far as possible,” Walton added.
The strongest inflation pressure is expected to come from meat, cereal products, dairy, fruit and vegetables, the report notes. In particular, products that rely on wheat for feed, such as white meats, are likely to see prices soar in the short term.
IGD predicts that the acceleration in food inflation is likely to last until mid-2023. Additionally, the UK food and consumer goods industry is uniquely exposed to current pressures due to a reliance on food imports and the impacts still being felt from the EU exit.
The report also highlights the predicted rate of inflation is likely to push the economy into recession or, at least, into ‘stagflation’.
