IGD warns food prices will rise quickly this summer

Prices will rise at a rate of 15% as households pay more for staples such as bread, meat, dairy and fruit and vegetables, the Institute of Grocery Distribution (IGD) said.

More vulnerable people will skip meals, it warned, predicting that prices would rise faster and for longer than Bank of England estimates.

The IGD, which provides analysis to major grocers, said the UK was facing the highest cost of living pressures since the 1970s, mainly down to the Ukraine war.

Products that use grains directly, such as bread, and products made of animals that are fed on grain, such as chicken, will rise quickly in price in the summer or autumn, IGD said.

Chickens grow quickly, so it will only take weeks for animal-feed price rises to be felt by consumers.

The squeeze on fuel and energy costs will also push food prices higher, because a lot of agriculture is very energy intensive, it said. Fertiliser prices have also nearly tripled since last year.

A lot of foil and wood pulp normally come from Russia, and the war has driven up packaging prices of those materials. Plastic packaging, which is made from oil, is also more expensive.

Ukrainian roads, ports and warehouses have been heavily damaged in the war, and so the volume of exports will be reduced “for years to come” IGD said, putting pressure on supplies of sunflower oil and wheat.

The UK also faces particular problems, it said. Two-thirds of the people on the Seasonal Agricultural Workers scheme were from Ukraine last year, but this year, Ukrainian men between 18 and 60-years-old have been told to stay at home and fight.

Gaps are being plugged by workers from further afield, but the new workers need training, and those costs will feed into price rises, IGD said.

The UK gets about 40% of its food from outside the country, so it is exposed to global food price rises.

And since Brexit, European Union producers are less likely to prioritise UK customers, it said.

The Bank of England expects inflation to fall back next year, but IGD said higher inflation could last longer if there are more food export bans or more trade disruption due to new Brexit border arrangements in 2023.

The rise in food prices will hit vulnerable families the hardest, IGD chief economist James Walton said.

“Sadly, many households in the UK struggled with food bills before the current inflation event began,” he said.

“With prices for energy, motor fuel and food rising fast, more households are moving into this vulnerable group.”

He said that IGD research had found shoppers increasingly reporting skipping meals, “especially when there are children in the household”.

Mr Walton expected shoppers in general to make money-saving changes to behaviour including eating out less and more at home, planning their menus ahead of time and making fewer spontaneous buys, cooking from scratch and eating up leftovers, shopping around and splitting shops between retailers, and switching from named brands to own-label products.