Why your food bill is about to soar... again

Ex­perts warn of huge gro­cery price rises in new year

The Sunday Post (Inverness) - - Front Page - By Kieran An­drews KIANDREWS@SUNDAYPOST.COM

The price of gro­ceries will surge af­ter Christ­mas, ex­perts have warned.

Every­day sta­ples such as bread, milk and but­ter have al­ready in­creased sig­nif­i­cantly this year.

Com­pe­ti­tion for shop­pers means su­per­mar­kets will keep prices down un­til Christ­mas.

But a raft of price rises could hit early in the new year just as cash­strapped fam­i­lies strug­gle to make ends meet.

Re­search by ac­coun­tancy gi­ants PwC re­veals the cost of but­ter rock­eted 36% be­tween last Christ­mas and the end of May, while poul­try prices in­creased by 27%.

Ba­nanas went up by 12%, lamb by 15%, beef by 12% and milk by 8%, ac­cord­ing to the anal­y­sis based on Of­fi­cial Na­tional Sta­tis­tics and Kan­tar UK data.

That has led to fears that the cost of other treats such as cakes and pas­tries will also have to rise ahead of the peak Christ­mas buy­ing sea­son.

Mean­while, se­vere weather in France, Spain and Italy and wild­fires in Cal­i­for­nia will push up the price of wine.

The events have left global sup­plies tum­bling by 8% while the av­er­age cost of a bot­tle of plonk is £5.56 – up 16p in 12 months.

With the price of com­modi­ties, such as wheat and milk, key in­gre­di­ents in many sta­ple foods, ris­ing 5% from Christ­mas to May 2017, PwC thinks there will be fur­ther price in­creases for the rest of the year.

Stephen Old­field, a part­ner and UK and Eu­rope food spe­cial­ist at PwC, said in­tense com­pe­ti­tion in the run up to Christ­mas means it is un­likely we will see im­me­di­ate large hikes.

But he ad­mit­ted that will al­most cer­tainly give way in the NewYear and Jan­uary pay pack­ets will have to stretch even fur­ther.

The in­creased cost of key in­gre­di­ents and a weak pound are be­ing blamed for fu­elling in­creased pro­duc­tion costs, which are al­most cer­tain to be passed on to shop­pers.

It emerged this week that Al­lied Bak­eries, which makes Kingsmill, Bur­gen, Allinson and Sun­blest bread, is in talks with su­per­mar­kets about the rise in the price of wheat which has tipped the com­pany into a loss of tens of mil­lions of pounds over the past year. PwC has rec­om­mended sup­pli­ers and re­tail­ers work to­gether to en­sure costs are ab­sorbed.

Mr Old­field said: “The fun­da­men­tal is you have Brexit, which has caused the cur­rency move. The sec­ond area is com­mod­ity price in­fla­tion. Com­mod­ity prices are al­ways vo­latile.

“My con­cern is com­pe­ti­tion in the Christ­mas mar­ket means price rises will be held back into the first quar­ter of next year. Two things have driven food costs up, the cur­rency and com­mod­ity price, and the ques­tion is how are these trans­lat­ing into food prices?

“How much of the costs are go­ing to be ab­sorbed into the food chain and how much will find its way on to the shelves?

“My view is that, be­cause of the com­pet­i­tive pres­sure, the su­per­mar­kets are not able to ab­sorb the ex­tent of the food cost in­crease that has been com­ing on since Brexit.”

Prices are al­ready creep­ing up, ac­cord­ing to con­sumer group my Su­per­mar­ket. Its monthly gro­ceries tracker found a bas­ket of 35 pop­u­lar items cost £85.22 in Oc­to­ber, up from £84.90 the pre­vi­ous month.

Onions saw the big­gest monthly price in­crease, up 19% to £ 1.32 per kilo. But­ter, which has seen a steady in­crease of 9% over the year, rose 5% be­tween Septem­ber and Oc­to­ber.

Mush­rooms were up 4% and pa­per goods also saw an in­crease, with kitchen tow­els and toi­let rolls up 3% and 5% re­spec­tively.

Although the price of broc­coli fell slightly be­tween Septem­ber and Oc­to­ber, it is cur­rently 36% more ex­pen­sive than a year ago, while car­rots are 27% more ex­pen­sive.

Ewan MacDon­ald-Rus­sell, head of pol­icy at the Scot­tish Re­tail Con­sor­tium, called on the Scot­tish Gov­ern­ment to help shop own­ers in their up­com­ing Bud­get so costs aren’t passed on to cus­tomers.

He said: “In­creas­ing global food prices, com­bined with the weaker pound has left re­tail­ers fac­ing sig­nif­i­cantly higher bills for im­ported goods.

“That’s been ex­ac­er­bated as re­tail­ers have to pur­chase more fresh pro­duce from over­seas as we move into win­ter.

“With re­tail­ers al­ready un­der the cosh due to high busi­ness rates and other gov­ern­ment costs, those higher prices have re­gret­tably to be passed along, in part, to con­sumers.

“That’s of se­ri­ous con­cern to house­holds al­ready deal­ing with higher in­ter­est rates and other costs.

“This is some­thing the Scot­tish Gov­ern­ment should be con­scious of as they pre­pare for the De­cem­ber Bud­get.”

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