Warning of more food price increases

FOOD prices have risen to their highest level in more than a year with further increases likely as the year progresses.

New statistics from the British Retail Consortium (BRC) show UK food inflation rose to 3.8 per cent in August, with huge fluctuations in global commodity prices, particularly sugar and wheat, behind the increase.

Wheat prices alone have risen by 60 per cent this year.

The rising costs are likely to mean higher prices for meat, with concern over inflation in the cost of livestock feed.

In addition, lower meat stocks in major producing countries such as Argentina, Australia and the United States, will continue to add pressure.

While prices may be set to increase further this year, experts are reassuring consumers there is unlikely to be a repeat of the record high rises in food prices seen during 2008.

British Retail Consortium director general Stephen Robertson said: “Non-food inflation continues to fall and is at its lowest since November 2009. But food inflation is up to a 13-month high.

“Past rises in the cost of global commodities, such as wheat and sugar, are filtering through to food prices.

“But we’re nowhere near the return of the double-digit food inflation of two years ago. Despite its recent increase, wheat is over a third cheaper than its peak in 2008, while oil prices are virtually half of what they were back then.

“In response, retailers are offering more deals. Milk and bread are particularly competitive battlegrounds. A third of groceries are now on promotion and customers are shopping around.”

Wheat prices have risen in response to poor weather conditions in key producing countries.

President Vladimir Putin has banned the export of wheat from Russia until next year after drought dramatically reduced the size of its harvest. Poor harvests in Germany as well have contributed to the rise.

Domestic supply remains steady, with Yorkshire and farmers elsewhere in Britain having endured another patchy harvest season due to wet weather in August, albeit far better than the previous two harvest seasons. An estimated 90 per cent of the UK crop has now been harvested.

Alex Waugh, director of the National Association of British and Irish Millers, said it was “inevitable” that there would be some further increase in prices this year but said it was still too early to determine by how much. The rain in mid-August means that this year’s harvest quality might be a bit more variable. All things considered there should be enough wheat to go around.”