UK food costs remain stubbornly high
Grocery inflation in the UK has started to ease as two separate surveys suggest that food-price growth may have passed its peak, Bloomberg reported on Tuesday.
Food inflation in the country fell for the third consecutive month in June but still remains at 16.5%, down from 17.2% the previous month, according to data from market-research company Kantar.
Inflation stands at its sixth-highest level since the financial crisis in 2008, according to Kantar. Eggs, cooking sauces and frozen potato products saw the biggest price rises.
Another study, conducted by Lloyds Bank, said food-production costs in the UK declined for the first time in May since 2016.
Grocery-price growth reached 19.1% in April, which was the highest rate in more than 45 years, according to the Office for National Statistics (ONS).
Bank of England Governor Andrew Bailey earlier warned that the easing of inflation could take longer than expected.
“The ongoing squeeze is clearly weighing on the nation’s mind,” head of retail and consumer insight at Kantar, Fraser McKevitt, said. “Of the top five financial worries that consumers have, rising grocery prices is the only one that they are more concerned about now than at the start of this year.”
An index tracking costs for food and drink producers fell for the first time in more than seven years, a Lloyds’ survey showed. However, “it will still take some time before we see the benefit in terms of shelf prices,” according to Annabel Finlay, managing director of food, drink and leisure at Lloyds Bank Commercial Banking.
“This is, in part, due to the long-term nature of contracts between the manufacturers and retailers, as well as the broader segments of the production chain,” she added.
Earlier, UK officials reportedly met with supermarket bosses to negotiate price cuts, reassuring them that any scheme to help bring down food prices for consumers would be voluntary.
Last week Ken Murphy, CEO of Britain’s biggest supermarket chain Tesco, pointed to some signs of cooling grocery inflation after the company cut prices on bread, pasta and broccoli, but admitted that “it’s unlikely that prices will return to where they were.”
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