Food prices will drop over the next few months, retail experts have said, despite inflation being still above 10 per cent.
Inflation, which measures the rate of price rises, fell to 10.1 per cent in the year to March from 10.4 per cent in February, driven by food prices rising at their fastest rate for 45 years. The biggest drive came from grocery products including olive oil (up 49 per cent), milk (up 38 per cent) and ready meals up (21 per cent).
“As food production costs peaked in October 2022, we expect consumer food prices to start coming down over the next few months,” BBC quoted British Retail Consortium as saying, highlighting the three to nine-month lag to see price falls getting reflected in shops.
The war in Ukraine has driven up food prices around the world. Bad weather abroad led to shortages of some vegetables – a situation made worse by UK farmers producing less due to surging energy costs. Farmers have also argued that supermarkets are not paying a fair price for their produce – something the supermarkets deny.
The government’s former food tsar Henry Dimbleby has said supermarkets having “fixed-price contracts” with suppliers means that when food is scarce, some producers opt to sell less to the UK and more elsewhere in Europe.
Analysts at Capital Economics said UK inflation had “risen further and stayed higher than elsewhere as the UK has experienced the worst of both worlds – a big energy shock, like the euro-zone, and labour shortages – even worse than the US.”
Chancellor Jeremy Hunt too is confident that inflation would fall sharply by the end of the year.
“We have a plan and if we’re going to reduce that pressure on families, it’s absolutely essential that we stick to that plan, and we see it through so that we halve inflation this year as the prime minister has promised,” reports quoted Hunt as saying.
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