What has caused the cost of food imports to rise by £5.8bn?

1 December 2022

Leaving the European Union caused the cost of food imports to the UK to rise by £5.8bn over two years, according to research. 

A report, Non-tariff barriers and consumer prices: Evidence from Brexit by the Centre of Economic Performance, said food import costs had risen by 3% a year between 2019-21.

The research compared 70 different food products between January 2011-January 2022. 

The report said: “Firms faced higher costs [following Brexit], and passed most of these on to consumers.”

It continued: “From quarter one of 2021 onwards, products that were more reliant on EU imports had significantly higher consumer prices than products that were less reliant, suggesting that higher trade barriers from Brexit increased costs which were passed on to consumers.”

Goods from the EU are now subject to comprehensive customs checks and rules of origin requirements, among other restrictions. 

Richard Davies, professor at Bristol University and co-author of the study, said: “The UK inflation rate rose above 11% in 2022, the highest rate in 40 years. Many factors affecting both supply and demand for goods and services are involved. One factor in this high inflation has been the rise in non-tariff barriers for trade with the EU.

“In leaving the EU, the UK swapped a deep trade relationship with few impediments to trade for one where a wide range of checks, forms and steps are required before goods can cross the border. Firms faced higher costs and passed most of these on to consumers.

“Over the two years to the end of 2021, Brexit increased food prices by around 6% overall.” 

In 2015, 53.4% of UK goods imports were from the EU, along with 77.5% of food imports. 

The study found that prices began increasing in 2019 in “anticipation and adjusting to expected future costs” from higher trade costs and investments needed to conform to future trade barriers, which firms began passing onto consumers “immediately”. 

Nikhil Datta, assistant professor of economics at Warwick University and co-author, added: “We calculate that Brexit caused a loss of £210 for the average household, or £5.84 billion overall, when looking at its impact on the food market alone. Since poorer households spend a larger fraction of their income on food, they are hit harder.” 

The report comes as overall UK food inflation hits 12.4%, according to research by the market research firm NielsenIQ and the British Retail Consortium. This is the highest inflation rate in the food category on record, driven by energy costs and rising prices for animal feed and transport.

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