Brits should prepare for more food shocks: BoE

Consumers should prepare for more food price spikes in the future as climate change and geopolitical tensions cause shocks, Bank of England rate-setter Swati Dhingra has warned, saying Britain relies on imports to produce 80 per cent of its food, much higher than estimates by the UK government.

“Given that we’re going to be possibly — and I can’t be certain about this — possibly seeing more such kinds of food price hikes, primarily coming from the geopolitics as well as climate change, I think we need to have a food preparedness program in place,” she said Tuesday (14) at a panel discussion hosted by the Festival of Economics in Bristol.

The trade expert added that the UK’s reliance on imported food is “pretty high” compared to other major economies. It is as high as 80 per cent when considering inputs to food producers, such as ingredients and fuel which in turn is much higher dependency on imports than what government’s claim of around half of the food consumed in Britain is from imports.

“We’ve got to at some point really have a big societal conversation about the fact that many of our prices, not just in food but more broadly, are not set in the UK, they are set abroad,” BNN Bloomberg quoted Dhingra as saying.

Dhingra is known to be among the most dovish rate-setters at the BOE and was voting to end interest rate rises long before the nine-member Monetary Policy Committee decided to pause the hiking cycle in September.

The BOE said in its November monetary policy report that it expects further declines in food price growth to be one of the key drivers of lower inflation in the near term.

Dhingra’s remarks lay bare the UK’s exposure to global supply shocks, adding to concerns of a return to more volatile prices. Food price inflation soared to its highest level in decades earlier this year as the war in Ukraine disrupted the supply of grains and farmers were hit by a surge in their fertiliser and feed costs.

Meanwhile, inflation cooled more than expected in October as household energy prices dropped from a year ago amid a wider softening of price pressures. The official inflation number in the country has fallen sharply to a lower-than-expected 4.6 per cent from 6.7 per cent in September.