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Industry data shows that food inflation in the UK has risen to its highest percentage in over a year as dry climates push prices up as fruit and vegetable harvests.
The UK Retail Consortium said on Tuesday that the annual rate in June was 3.7% in June, the highest from 2.8% in March 2024.
“In the UK, hot, dry weather and lower yields have led to increased prices of fruit and vegetables,” said Herendykinson, CEO of BRC.
Met Office reported that this spring was the record-breaking warmest and sunniest spring for the UK. This was a blessing for the farmers of crowds. The early spring sun and heat increased the yield of fresh produce, such as strawberries and tomatoes, while the lack of rain highlights cultivated crops such as wheat and barley.
“From a UK perspective, we have put a lot of pressure on outdoor production, especially within Europe, where there have been another extreme weather, cumulatively becoming supply chain cost pressure.
According to FPC, the UK imports 65% of the fresh produce it consumes.
According to the UN Food and Agriculture Organization index, global food prices rose at an annual rate of 6% in May, dairy prices rose 21% and vegetable oils rose 19%.
The BRC figures are ahead of the official UK inflation data for June, which will be released on June 16th. This year’s BRC and inflation data show food price picks compared to most of 2024.
In May, last month, ONS reported a sharp monthly price rise for meat, fish, dairy products, chocolate and confectionery, contributing to an annual inflation rate of 3.4%.
The Bank of England expects inflation to remain above its 2% target for most of the year driven by energy and food, but overall wage growth continues to outperform price increases.
Food prices may limit the pace of interest rate cuts this year, as price growth will have a greater impact on household inflation expectations than other items.
The market is priced in that BOE will reduce borrowing costs by a quarter point for the remainder of the year from the current 4.25%.
The BRC said fresh food prices rose at a rate of 3.2% per year in June, up from 2.4% in May. Prices for surrounding foods that can be stored at room temperature were 4.3% per year in June, up from 3.3% in May.
The rise in food prices has returned to overall store prices, from a 0.1% decline in May to an annual rate increase of 0.4% in June. Non-food prices fell at an annual rate of 1.2%, down 1.2% in June, from minus 1.5% in the previous month.
BRC’s Dickinson said retailers warned of rising consumer prices, citing the increased employer national insurance contributions and national living expenses introduced in April, as well as the increased impacts of geopolitical tensions and climate change.
“Within three months of the costs imposed in last fall budget, headline shops prices have returned to inflation for the first time in nearly a year,” she added.
Mike Watkins, head of retailer and business insights at Nielseniq, can help you compile your data.
Additional Reports by Madeleine Speed
