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Fresh Food Prices Skyrocket Over Christmas

UK shoppers faced record high fresh food prices in December, just as many families would have been stocking up for the holiday season, according to the British Retail Consortium (BRC). Fresh food inflation hit 15% in December, up from 14.3% in November, marking the highest monthly inflation rate for fresh food since records began in 2005. The increase has been driven by rising costs of animal feed, fertiliser and energy. Overall, food inflation reached 13.3% in December.

Prices ease for non-food items

However, prices for non-food items eased as retailers offered big discounts in an attempt to shift excess stock. The BRC, which tracks the prices of 500 everyday items every month, also warned that this year is expected to be another difficult one for consumers and businesses, as “inflation shows no immediate signs of waning”. The latest official data from the Office for National Statistics showed that the rate of inflation dropped back slightly, but remains close to a 40-year high.

Grocery sales during Christmas period

Market research firm Kantar also reported that grocery sales hit £12.8bn in the four weeks leading up to Christmas Day, with mince pies and Christmas puddings proving popular. However, the proportion of households buying Brussels sprouts fell to 45%, down from 48% the previous year.

Retail analyst and former senior buying manager at Asda, Ged Futter, stated that the rise in food prices, particularly in fresh food, has been ongoing for some time. “It’s all about feed, fertiliser and fuel, and all of last year they were going up,” Futter said. “Fresh food shows no signs of those prices coming down.” He added that food prices are likely to remain high at the start of this year, before eventually starting to fall.

christmas food in supermarket
Christmas food prices rose sharply, with little signs of slowing down

Less disposable income for non-essentials in January

Higher food and energy prices, combined with the arrival of Christmas spending bills, mean that shoppers will have less disposable income for non-essential items in January, according to Mike Watkins, head of retailer and business insight at NielsenIQ. The BRC also warned that shoppers could be hit with even higher prices when the energy bill support scheme for businesses ends in April. Retailers have so far tried to absorb rising costs rather than passing them on to customers, but may have no choice as bills are due to increase without future support.

Energy Bill Support Scheme under review

The government fixed wholesale gas and electricity prices for firms for six months between October and March, but the Treasury has announced that the scheme is under review as it is “very expensive”. Chancellor Jeremy Hunt is set to meet with business groups on Wednesday to brief them on the government’s plans for energy bill support after the current package expires. The Federation of Small Businesses, UK Hospitality, the CBI and the British Chambers of Commerce are all expected to attend the meeting.

Final Thought

The issue of rising food prices has been a source of concern for many, with the government coming under pressure to address the issue and find ways to help bring down food prices.

With the UK increasingly reliant on food imports in recent years, we are particularly vulnerable to fluctuations in global food prices. Increasing domestic food production has been a point of contention, however there is likely little to be done on this front before the next election cycle.

The government has faced criticism for its handling of the COVID-19 pandemic and its impact on the economy, and rising food prices could further fuel discontent among voters. If the government is unable to address the issue of high food prices, it could potentially lead to further political backlash and undermine public confidence in the government’s ability to manage the economy effectively.

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