Not a single item in the average British grocery shop is falling in price. From basic essentials such as bread, milk and cheese to sugar and tea, the cost of a weekly food shop is rising at the fastest annual rate since 1977.
More than a year into the worst period for living standards in modern records, Britain’s cost of living crisis is taking a horrifying turn. First came rocketing energy prices. Now the baton is being passed from our gas and electricity bills to the supermarket till receipt.
Last week’s news that inflation in food and nonalcoholic drink has reached 19.1% should be setting alarm bells ringing across the government.
For poorer families, who spend a larger portion of their income on food and other basic essentials, the impact is worse still. Even before the cost of living crisis took root, 4.7 million people were in food insecurity, with Britain already a nation of rising in-work poverty and families – including 800,000 children – forced to turn to food banks.
However, while Rishi Sunak has promised to halve inflation this year, as one of his five key priorities before the next election, there is little sign his government has a grip on the food crisis sweeping Britain. Rather than focus on soaring costs in the supermarkets, the prime minister is preoccupied by the pay of junior doctors and nurses.
Last week’s inflation figures for March show a worrying new phase of the cost of living crisis is taking root.
The energy price surge triggered by Russia’s invasion of Ukraine is beginning to fall out of the annual inflation estimate. Prices might remain at sky-high levels but are at least not getting worse. In the clearest example in the March data, petrol and diesel prices were in sharp reverse, helping the annual inflation rate cool to 10.1%.
Economists expect inflation has slowed further in April, as the anniversary of the eye-watering 54% increase in the Ofgem price cap in the same month a year ago becomes the new baseline for energy prices rather than previous lower levels.
However, food prices are pushing firmly in the opposite direction, slowing the fall in headline inflation. It is a development that should have ministers scrambling for solutions, focused on how to support households, and to bolster Britain’s often overlooked food supply chain.
Most of the food shock is the result of Vladimir Putin’s war hitting energy markets and disrupting key commodities such as fertiliser, wheat and vegetable oils – only with a lag effect. Wholesale food commodity prices have fallen sharply in recent months but farmers and food manufacturers buy and sell using long-term fixed contracts – making food a tough industry to knock inflation out of the system.
Extreme weather hitting harvests, Britain’s largest ever outbreak of bird flu, and possible profiteering by food manufacturers and price gouging by supermarkets have added another layer of upward pressure on prices.
Some factors are within the government’s control, however.
On the Brexit-supporting right of politics there is a fashion to criticise the Bank of England for failing to control inflation and getting all of its forecasts wrong. But rather than leaving the EU bringing a 20% cut in food prices, predicted by Jacob Rees-Mogg, exactly the opposite has happened.
No flood of cheap produce from the rest of the world materialised, for plenty of good reasons. Imports from the EU have remained desirable because of geographic proximity, high welfare and hygiene standards, and reliable supply chains for fast-moving, and often perishable, consumer goods.
Not all of this is a Brexit story, though. Britain is not alone in suffering high food inflation – grocery prices are rising at a similar rate in the EU, with higher food price inflation in some nations such as Germany and Sweden.
The weakness of the pound since the 2016 Brexit vote – with an even worse performance during Liz Truss’s disastrous premiership – has driven up import costs. This has an impact, especially during last winter. But despite seasonal variations, about half of the food consumed in Britain is of domestic origin.
However, British farmers warn that the government is failing to take adequate steps to support domestic production. Brexit has compounded labour shortages – including a lack of seasonal agricultural labour and skilled butchers, which farmers and food producers say the government could take more action to address.
Last summer, ministers came forward with a food strategy in an attempt to raise domestic food security, which was later condemned by the government’s own lead adviser on the issue. Minette Batters, the president of the National Farmers’ Union, says more could be done, as a lack of support forces many farmers to go out of business or mothball production in the face of rising costs.
“There is a lot the government can do but it’s not using the powers it has got. We’ll continue to flip-flop from crisis to crisis unless we start to have a policy that delivers on domestic supply.”
Some critics argue that food prices had fallen to unsustainably cheap levels in recent decades, driven by supermarket competition, global supply chains and industrialised food processing. However, this provides yet further evidence of the need for the government to get a grip. If the market entered the current crisis in a fragile state, is the best solution to simply watch as it fails?
The dangers of leaving households to face the full brunt of dysfunctional market forces are plain to see.
About half of adults are worried about food costs, official estimates show, with higher rates in deprived areas. Soaring prices for nutritious, healthy food will have the biggest impact on poorer families, at a time when long-term ill health is at record levels among working-age adults.
With the cost of living crisis entering a new phase, action is required to prevent soaring food costs from stoking already worrying health inequalities. Failure would risk perpetuating the crisis long into the future.
