High costs risk becoming “baked in” as supply chain disruptions caused food inflation to hit 18.2% last month, according to industry leaders.
Shortages of tomatoes, peppers and salad items contributed to food inflation soaring to 18.2% in February year on year, up from 16.8% in January, according to the latest figures from the Office for National Statistics.
Overall, inflation rose from 10.4% in February 2023, up from 10.1% in January, as the energy crisis and food shortages pushed up prices.
British Retail Consortium CEO Helen Dickinson said: “While inflation is expected to subside later this year, prices are likely to remain elevated as the higher costs throughout supply chains become baked in. Retailers are committed to doing everything they can to keep the price of essentials low through expanding value ranges and offering discounts for vulnerable groups.
“Against this backdrop, government must do more to limit one of the biggest drags to retail investment, which is oncoming regulatory burdens heading down the track, or risk a crash in business investment and further inflationary pressures.”
The energy crisis has ramped up gas and electricity bills for growers, forcing many UK greenhouses to lower production levels, while the rising cost of animal feeds and fertilisers have driven up the prices of supermarket staples, Dickinson said.
Vegetable prices rose 18% year on year – the highest rate since February 2009. Inflation rates for bread and cereals, chocolate and confectionery were also at their highest levels since the 2008 financial crash.
National Farmers’ Union president Minette Batters said: “It’s not surprising that food inflation has remained high given farmers and growers are continuing to experience increased production costs, particularly those linked to high energy use.”
Continued government support on energy costs will be “key” for controlling inflation and ensuring food security, she said, and argued there is “virtually no support” planned for the food sector on energy costs after the Energy Bill Relief Scheme finishes at the end of March.
Food and Drink Federation chief executive Karen Betts said the figures reflect “the continued, significant pressure the food and drink sector is under as businesses grapple with persistent cost rises”.