Food prices are likely to remain high for the rest of the year, the Bank of England has warned.
The Bank said there was “quite wide agreement” that food price inflation had now peaked and was expected to be significantly lower by the end of the year at “perhaps around 10 per cent or slightly lower”.
It said that cost inflation experienced by food producers had fallen, but still remained much higher than usual, and could take longer for some producers to see lower pressures, particularly where there were annual contracts with suppliers or group-buying arrangements.
Many food producers were also facing significant cost pressures from wages and energy. While wage growth was expected to remain higher than normal into 2024, many businesses would not benefit from the reduction in wholesale gas prices until their energy contracts come up for renewal.
PwC, meanwhile, declared that the era of cheap food has probably come to an end in the UK, calling on for the need to build resilience in the UK economy by doing more to bolster the domestic food-growing industry.
Which? head of food policy Sue Davies said: “It’s worrying that food prices are expected to remain high for the rest of the year as people continue to struggle.
“This means they will continue to put huge pressure on millions of families and people on low incomes who have struggled to cope with rising costs month after month. Supermarkets can take meaningful action to help customers who rely on more expensive convenience stores by ensuring they stock a range of budget products that support a healthy diet, as Which? research has found these items are rarely, if ever, on sale in smaller branches.
“The Competition and Markets Authority recently agreed with Which? that grocery pricing can be unclear, so supermarkets must also act immediately to make it easier for shoppers to compare prices, while the Government must fulfil its promise to close the loopholes that are making it too easy for supermarkets to confuse shoppers.”
