Food prices to rise 20 per cent by 2018

Will Green is news editor of Supply Management
12 December 2013

Food prices are predicted to increase by 20 per cent over the next four years, according to a report.

Prestige Purchasing predicted average prices will be forced upwards by a combination of forces, including higher production costs, poor weather and commodity markets.

Chief executive David Read said: “All of the big influences on inflation in food and drink are not going to change in the short term, so therefore we think food and drink will out-track headline inflation for the foreseeable future. That certainly could be eight to 10 years.”

Since 2007, food prices have risen on average by 30 per cent, and during 2014 they are expected to increase by 3.8 per cent, compared with a predicted rise in the consumer price index rise of 2.3 per cent. Soft drinks are predicted to rise by 3.2 per cent and alcoholic beverages by 4.1 per cent.

During 2013, prices were driven higher by poor harvests in 2012, which hit the price of grains, fruit and vegetables; and the horse meat scandal, which contributed to a 14 per cent increase in the price of beef as supermarkets changed sourcing policies.

Inflation during 2013 was 4.2 per cent for food, 1.4 per cent for soft drinks and 3.1 per cent for alcohol.

The 2013 Food and Drink Inflation Report said macro trends of water scarcity, population growth, climate change, production costs and commodity markets would all push prices higher over the long term.

Read said there would be a 14 per cent increase in protein consumption in developing countries by 2050 as people grew richer, driven by demand for beef and dairy products.

“Demand for meat will come out of changing diets,” he said. “Beef is now, and in the future, going to be an issue.”

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