Food Inflation Continues To Soar

 Namnews, 28th September 2022

With input costs mounting, food inflation hit another high this month, with few signs that pressures on manufacturers and retailers are easing.

Overall shop price inflation accelerated to 5.7% in September, up from 5.1% in August, in another record since the British Retail Consortium-NielsenIQ Index began in 2005.

Food price inflation rose from 9.3% to 10.6%, driven by the war in Ukraine, which is continuing to push up the price of animal feed, fertiliser and vegetable oil. The BRC noted that products such as margarine were most affected, although the heatwave over the summer did help push down prices for some fruits, such as strawberries, blueberries and tomatoes.

Fresh food inflation rose from 10.5% in August to 12.1% this month, while ambient inflation increased from 7.8% to 8.6%. The figures were the highest on record for fresh and the fastest rate of increase recorded for ambient.

Meanwhile, non-food inflation rose from 2.9% last month to 3.3% in September, largely driven by DIY, gardening and hardware products which, as heavier items, have been harder hit by rising transport costs.

Helen Dickinson, Chief Executive of the BRC, noted that retailers were battling huge cost pressures from the weak pound, rising energy bills and global commodity prices, high transport costs, a tight labour market and the cumulative burden of government-imposed costs.

She added: “And, with business rates set to jump by 10% next April, squeezed retailers face an additional £800m in unaffordable tax rises. Government must urgently freeze the business rates multiplier to give retailers more scope to do more to help households.”

A recent survey by NielsenIQ found that 76% of consumers expect to be “moderately or severely” affected by the cost of living crisis over the next three months, up from 57% recorded in the summer.

Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, commented: “So households will be looking for savings to help manage their personal finances this autumn, and we expect shoppers to become more cautious about discretionary spend, adding to pressure in the retail sector.”

NAM Implications:

• The fundamental issue has to be what action the consumer will take to cope with:
  • Food inflation going up 10.5%
  • Energy up 30% – 100%+
  • Travel?
• i.e. how many will see wage/salary increase as the only way forward…
• In which case what % increase will they deem necessary/essential to reduce the pressure?