food price rises - Neighbourhood Retailer

IGD warns food prices will rise quickly this summer

Linda Stewart — Thu, 16 Jun 2022 14:10:02 +0000

Food prices will rise quickly this summer due to soaring costs, grocery analysts have predicted.

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.

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Rise in UK families saying they skip meals or go hungry as food prices rise

Linda Stewart — Mon, 09 May 2022 09:35:29 +0000

More people in the UK are struggling to afford to eat every day as food prices rise, according to research by charity the Food Foundation.

Around one in seven adults live in homes where people have skipped meals, reduced meal sizes or gone hungry, an online survey suggested.

Food has become more expensive as producers push their rising energy costs on to consumers.

Prices are rising by 7% a year in the UK – the highest rate for 30 years.

The Bank of England has warned inflation might reach 10% within months, as the rising prices of fuel and food put pressure on household budgets.

The Food Foundation also said that people had increasingly opted to take more cold food from food banks because of fears that cooking items would increase their energy costs.

The research by YouGov saw 10,674 adults surveyed online between April 22 and 29. It found the number of people struggling to buy food has risen by 57% in three months.

Nearly 14% of survey respondents said they or someone in their household had eaten smaller meals or skipped meals because they were not able to afford it during the past month. This was up from 8.8% of the survey respondents in January.

Anna Taylor, executive director of the Food Foundation said the situation is “rapidly turning from an economic crisis to a health crisis” which food banks should not “possibly be expected to solve”.

“The government needs to realise the boat is sinking for many families and it needs to be fixed. Bailing out with emergency food parcels is not going to work,” she added.

A government spokesman said: “We recognise the pressures on the cost of living and we are doing what we can to help, including spending £22bn across the next financial year to support people with energy bills and cut fuel duty.

“For the hardest hit, we’re putting an average of £1,000 more per year into the pockets of working families on Universal Credit, have also boosted the minimum wage by more than £1,000 a year for full-time workers and our Household Support Fund is there to help with the cost of everyday essentials.”

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Marmite and PG Tips maker Unilever warns of price rises

Linda Stewart — Thu, 21 Oct 2021 09:51:32 +0000

Consumer giant Unilever has warned it plans to raise prices to cope with “elevated levels” of cost inflation which it expects to continue next year.

The company that owns brands such as Marmite, PG Tips and Dove says it has already taken “appropriate pricing action” which will continue across its global operations and within each of its product divisions.

The company reported a 2.5% rise in sales for the third quarter of 2021. Growth was supported by a 4.1% increase in prices while the volume of goods sold fell by 1.5%.

The UK consumer prices index (CPI) measure of inflation slowed to 3.1% in the year to September, according to the Office for National Statistics. However, inflation is expected to accelerate in the coming months due to a rise in energy costs and continuing disruption to UK and global supply chains.

Unilever’s chief financial officer Graeme Pitkethly said: “We expect inflation to be higher next year than this year.”

Unilever sells to businesses such as retailers, supermarkets and wholesalers who will be considering whether or not to pass on higher costs to shoppers.

But Danni Hewson, financial analyst at AJ Bell, said Unilever was facing a “balancing act of not increasing prices so much that its products are no longer competitive”.

“It is a real test of the strength of the company’s brands,” she said. “After all, will we really stick with branded soap at a materially higher price when there’s an unbranded alternative sitting next to it on the shelf which is an order of magnitude cheaper?

“If enough consumers decide they can put up with a cheaper alternative then it would become a big problem for Unilever.”

Unilever’s brands include Simple skin care, Sure deodorant and Vaseline. It also produces Ben & Jerry’s ice cream, Cornetto, Hellmann’s mayonnaise and Knorr stocks.

Earlier this week, the boss of the Food & Drink Federation warned that the hospitality industry, which includes restaurants and pubs, was seeing “terrifying” price inflation of between 14% and 18%.

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Food and drink industry warns MPs of ‘terrifying’ price rises

Linda Stewart — Tue, 19 Oct 2021 15:58:19 +0000

Food and drink firms are seeing “terrifying” price rises , according to sector trade body, the Food and Drink Federation.

The industry has warned MPs of knock-on effects for consumers.

Food and Drink Federation boss Ian Wright told MPs that inflation is running at between 14%-18% for hospitality firms, the BBC reports.

The price rises for food firms’ ingredients would lead to consumer price rises, he said, describing the situation as concerning. The UK’s rate of inflation was 3.2% in August and is expected to rise further.

Bank of England governor Andrew Bailey recently warned it would have to act, and suggested that UK interest rates may soon rise from the historic low of 0.1%.

Mr Wright told MPs on the Business, Energy and Industrial Strategy select committee: “Inflation is a bigger scourge than anything else because it discriminates against the poor.”

The Office for National Statistics will publish the latest inflation figures for September on Wednesday. It is expected to rise further above the Bank of England’s target of 2% for longer than previously thought.

Baked in

Make UK, the manufacturers’ organisation, said that inflation was becoming “baked in” among its members.

Stephen Phipson, chief executive at Make UK, told MPs that while there was a welcome rise in demand, many manufacturers are looking at 30% to 40% average increases in material costs.

“When people are able to get hold of materials they are passing those costs on which does imply to us that inflation is more or less baked in at this stage now,” he said.

“This is not a transitory inflationary demand – we are seeing really serious issues now in terms of price increases.”

Surging energy prices

Des Gunewardena, chief executive of high-end restaurant group D&D London, says his business has seen half of its costs rise, including surging energy prices.

He says staff shortages are his “number one issue” and has increased salaries by 10%.

The business has 1,700 employees across the UK and is currently 150 staff short, which he said could lead to a “nightmare situation” in the busier December period.

Table covers have been reduced from 400 on a Friday night at his Quaglino’s restaurant to between 300 and 350 due to staff shortages.

However, he said the restaurants have seen increased customer spending, so he is stocking up on specific champagne brands ahead of time, to pre-empt possible supply problems.

“I think we’ll have a very strong Christmas so there’s no need to panic yet, but I expect further inflation in January when there won’t be the same spending to offset the extra costs”.

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Kraft Heinz warns of food price rises

Linda Stewart — Mon, 11 Oct 2021 14:09:55 +0000

Consumers will have to get used to higher food prices, the boss of Kraft Heinz has warned.

Speaking to the BBC, CEO Miguel Patricio said the international food giant, which makes tomato sauce and baked beans, was putting up prices in several countries, “across the board”.

The cost of ingredients such as cereals and oils has pushed global food prices to a 10-year high, according to the UN Food and Agriculture Organisation.

Kraft Heinz has increased prices on more than half its products in the US, its home market, and Mr Patricio said this was happening elsewhere too, citing a lack of truck drivers in the UK.

“We are raising prices, where necessary, around the world,” he said.

During the pandemic, many countries saw production of raw materials, ranging from crops to vegetable oils, fall due to Covid measures.

As restrictions have ended, the supply of these products has not been able to keep up with returning demand, leading to higher prices, with the additional impact of wages and energy prices.

“Specifically in the UK, with the lack of truck drivers. In [the] US logistic costs also increased substantially, and there’s a shortage of labour in certain areas of the economy,” Mr Patricio said.

Rising population

He warned that consumers will need to get used to higher food prices given that the world’s population is rising whilst the amount of land on which to grow food is not.

But not all cost increases should be passed on to consumers, Mr Patricio cautioned, saying businesses would have to absorb some of the rise in costs.

“I think it’s up to us, and to the industry, and to the other companies to try to minimise these price increases,” he said.

However, big food producers like Kraft Heinz, Nestle and PepsiCo “will most likely have to pass that cost on to consumers” according to Kona Haque, head of research at agricultural commodities firm ED&F Man.

“Whether it’s corn, sugar, coffee, soybeans, palm oil, you na

me it, all of these basic food commodities have been rising,” she said.

“Poor harvests in Brazil, which is one of the world’s biggest agricultural exporters, drought in Russia, reduced planting in the US and stockpiling in China have combined with more expensive fertiliser, energy and shipping costs to push prices up.”

Transport costs

PepsiCo has also wanted that it is also facing rising costs on everything from transport to raw ingredients, and said that further price rises were likely at the start of next year.

Mr Patricio admitted the pandemic boosted sales for some Kraft-Heinz brands,because people were cooking at home more than before.

Customers in the UK bought more Heinz Baked Beans, while customers in the US bought more Kraft Mac & Cheese.

The company is also undergoing an extensive restructuring under Mr Patricio, who also says it is spending significant sums on developing new packaging to meet its aims on reducing plastic waste.

Most of the 650 million bottles of ketchup the firm sells every year are plastic, but Mr Patricio said the firm was “encouraging” customers to buy glass bottles even though they are less convenient “because you have to tap on the bottom”.

“We are working hard, not only on the plastic bottles, but everywhere in our footprint that has plastic,” he said.

However following a shortage of single serving sachets during the pandemic, as consumers bought more takeaways from restaurants, Kraft Heinz has invested in expanding production by 30%.

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