Food Price Inflation Hits Record High in UK

Customer at the fruit and vegetable section at a Sainsbury's supermarket in Walthamstow, London, on Feb. 13, 2022. Tolga Akmen/AFP via Getty Images

Food prices in the United Kingdom have hit their highest record since 1980, after inflation soared by double digits last month.

Last month’s inflation figures have squeezed the living standards of millions of British households, especially those with low incomes, who are struggling with the high costs.

The British economy was hit hard by the surge in natural gas prices caused by Russia’s war against Ukraine, a pandemic-induced supply-chain crisis, a tight labor market, and a bungled attempt at economic reforms by former Prime Minister Liz Truss.

Overall store prices have risen 6.6 percent from the year-ago period, according to a study by the British Retail Consortium (BRC) and Nielsen’s Shop Price Index, on Nov. 1.

However, food price inflation rose to a record annual rate of 11.6 percent in October, the highest since July.

The total cost of fresh produce and British staples, such as tea, milk, and sugar, have all gone up. Fresh food prices saw a year-over-year increase of 13.3 percent, up from 12.1 percent last month.

Non-food inflation jumped to 4.1 percent, from 3.3 percent in September.

“It has been a difficult month for consumers who not only faced an increase in their energy bills but also a more expensive shopping basket, BRC chief executive Helen Dickinson said to The Independent.

“Prices were pushed up because of the significant input cost pressures faced by retailers due to rising commodity and energy prices and a tight labour market.”

“While some supply chain costs are beginning to fall, this is more than offset by the cost of energy, meaning a difficult time ahead for retailers and households alike,” she concluded.

The cost of food jumped well above September’s inflationary gain of 10.6 percent and above the three-month average rate of 9.7 percent.

UK Inflation Accelerates in the Fall

A separate report from the UK Consumer Price Index (CPI) registered an annual gain of 10.1 percent in September, according to the Office for National Statistics.

Core inflation, which excludes volatile food and energy prices, hit a new 30-year high of 6.5 percent.

According to the CPI’s figures, food and non-alcoholic beverages prices were the biggest driver of UK inflation through September, showing a 14.5 percent rise, the largest jump on record since April 1980.

“External factors are keeping shop price inflation at record highs, and the challenging economic conditions are significantly impacting consumer confidence and retail spend," Mike Watkins, head of retailer and business insight at NielsenIQ, told The Independent.

“With pressure growing on discretionary spend across both non-food and food retail, delivering good value is the table stake in the battle for shopper loyalty over the next eight weeks.”

New British Cabinet Attempts to Stabilize the UK Economy

The September CPI report is also used as a reference point for the “triple lock” indexing of state pensions, reported Reuters.

Meanwhile, Reuters reported that pensioners have not received a clear answer from the new cabinet of Prime Minister Rishi Sunak about whether pensions will rise in sync with prices in 2023.

Many poorer households are uncertain about the extent of financial support available to them after the new Chancellor of the Exchequer, Jeremy Hunt, announced cutbacks to state subsidies for household and business energy bills.

Hunt said that he would reduce the scope of the government subsidy program to six months from two years.

He made the announcement in an attempt to stabilize the UK’s financial markets, after they they took a fall due to the former prime minister’s  failed economic growth agenda.

The latest data will put more pressure on the Bank of England to further hike interest rates next month.

Their American counterparts at the Federal Reserve have already made the announcement, on Nov. 2, that they raised interest rates by another 75 basis points.

Short-term British government bond yields, which are sensitive to changes in interest-rate projections, rose on the news.

Reuters contributed to this report.