Food prices rise above Britain inflation in cost of living crisis

Bloomberg

The decades-long era of cheap food in Britain may be coming to an abrupt end.
With the UK wilting under the fastest inflation in three decades, supermarkets are raising prices at an even quicker rate, according to a new analysis prepared for Bloomberg. That’s turning the screws on shoppers who are already grappling with higher gas and heating bills and falling real incomes.
“In terms of prices, the only way is up,” said Honor Strachan, principal food and grocery analyst at GlobalData Plc, a research and consulting firm in London. “It’s something that we will have to get used to.”
A mix of cutthroat competition and innovation helped keep UK prices among the cheapest globally for decades, with the average share of household spending on food in Britain well below its European neighbours. Now a confluence of events, from Brexit to the pandemic and the war in Ukraine, is limiting supplies of everything from sunflower oil to wheat to the fertiliser needed to grow crops.
A basket of staples ranging from instant coffee to baked beans climbed more than 13% in price over the past year at Britain’s four largest supermarkets, according to retail research firm Assosia. A box of penne pasta led the way among the 18 items tracked, surging almost 50%. The most recent reading on the consumer price index, for March, shows inflation of 7%.
There’s no sign those price pressures will ease anytime soon. The Bank of England forecast the inflation rate will top 10% later this year, the highest level since the 1980s, and warned of the risk of recession. None of that is good news for over-stretched consumers, or for grocers. Most supermarket chains have seen sales start to retreat as the pandemic wanes and now have to weigh efforts to pass higher costs on to shoppers against the risk of losing them to rivals.
Discounters Lidl and Aldi are the only grocers in the UK that saw sales increase in the three months, while both Tesco Plc and J Sainsbury Plc — the country’s largest supermarkets — recently warned inflation is squeezing their profits. McColl’s Retail Group Plc, which operates 1,160 convenience stores, was acquired by Wm Morrison Supermarkets this week after collapsing into insolvency. The industry’s murky outlook is reflected in the credit market, where investors are keeping their distance from some supermarket debt.