Food price inflation slows but remains painfully high
19 July 2023
The rate of the UK’s food price rises has fallen for the third consecutive month, according to the latest ONS official figures.
- Business insights & economics
Food price inflation pared back to 17.4% from 18.7% in May, though still painfully high for hard-pressed shoppers.
This has contributed to UK inflation falling to its lowest level in more than a year. The rate fell sharply to 7.9% in June, down from 8.7% the previous month, although it remains almost four times higher than the official target.
Despite the better than expected figures, chancellor Jeremy Hunt said “we aren’t complacent and know that high prices are still a huge worry for families and businesses”.
Karen Betts, the Chief Executive of the Food and Drink Federation said:
“It’s encouraging to see food and drink price inflation falling to 17.4% from its peak of 19.2% in March. We hope the rate of food and drink price inflation will continue to fall steadily over the coming months, offering households some relief from the rapidly rising prices of recent months.
“However, food and drink manufacturers’ costs remain 33% higher than they were three years ago. Our sector is still dealing with many higher-than-normal ingredient costs and volatile and higher-than-normal energy prices, alongside persistent labour shortages. Global weather events – such as the heatwave currently affecting much of Europe – are also increasingly affecting agricultural output and seasonal supplies and will have an impact on prices. Russia’s decision to pull out of the Black Sea grain deal is unhelpful too and brings new risks to global grain supplies.
“Food manufacturers continue to do all they can to keep price rises to a minimum, making savings wherever possible while paying a fair price to their suppliers. But the impact on our sector is clear, with insolvencies on the rise particularly among smaller businesses, investments paused and vacancies unfilled - all of which is also having a negative impact on future growth.
“We need the government to continue to work with us rapidly and decisively to mitigate these issues – for example in simplifying regulation to help reduce cost burdens and create the conditions for growth.”
Resource: Economic insights
We publish timely analysis of developments within the wider economy and the food and drink industry, providing context about the economic events that shape our industry and views on potential future implications.Find out more