Egg and butter costs drive up UK meals inflation as households really feel squeeze | Meals & drink trade

[ad_1] A “important” bounce in the price of grocery staples akin to eggs and butter is stoking meals inflation, based on knowledge pointing to a renewed price of residing squeeze.

The British Retail Consortium (BRC) mentioned costs had risen at their quickest tempo for 18 months, with meals inflation hitting 4.2% this month. This was up from 4% in July and the very best studying since February 2024, based on its month-to-month store value monitor.

The BRC chief government, Helen Dickinson, mentioned the speedy rise added to the strain on folks already battling the price of residing.

“Staples akin to butter and eggs noticed important will increase because of excessive demand, tightening provide, and elevated labour prices,” she mentioned.

“Chocolate additionally bought costlier as world costs of cocoa stay excessive owing to poor harvests.”

The BRC additionally mentioned that its knowledge confirmed that general store value inflation elevated to 0.9% in August, at the same time as non-food merchandise fell by 0.8%.

Whereas outlets have been “doing every little thing they will to restrict value rises for households”, Dickinson mentioned, the trade faces £7bn in new prices after final yr’s autumn finances, when Rachel Reeves launched adjustments to employer nationwide insurance coverage contributions and the minimal wage.

Final week greater than 60 retail bosses, together with Tesco, Sainsbury’s and Boots, warned Reeves that growing taxes additional within the subsequent autumn finances might contradict her plans to enhance UK residing requirements.

In a letter coordinated by the BRC, the bosses mentioned they have been anticipating meals inflation to hit 6% later this yr.

Mike Watkins, the top of retailer and enterprise perception at NIQ, mentioned that the uptick in costs additionally mirrored different elements, together with world provide prices, seasonal meals inflation pushed by the climate and the tip of promotional offers linked to sporting occasions.

“As customers return from their summer time holidays, many might have to reassess family budgets in response to rising family payments,” Watkins added.

Final week official figures confirmed that inflation rose once more in July to a higher-than-expected 3.8%, partly pushed by greater meals costs and journey prices.

The annual charge of inflation, as measured by the buyer costs index, climbed from 3.6% in June to sit down above the Financial institution of England’s 2% goal for the tenth consecutive month.

Meals and non-alcoholic drinks have been up 4.9% yr on yr in July, the Workplace for Nationwide Statistics discovered, a rise from 4.5% within the 12 months to June. Beef, orange juice, espresso and chocolate have been among the many largest risers.

Droughts in Spain, Italy and Portugal, the place the UK sources a lot of its contemporary fruit and greens, have pushed up costs this summer time, at a time when costs sometimes fall.

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Larger grocery costs come as households additionally brace for steeper vitality payments, with the trade regulator for Nice Britain because of announce a brand new value cap on Wednesday.

Ofgem’s quarterly value cap is predicted to rise by 1% in October, based on forecasts from Cornwall Perception, a number one vitality consultancy.

It has predicted Ofgem will enhance the cap to £1,737 a yr for a dual-fuel family, from the present stage of £1,720. The rise would come into impact in October and stay in place till the tip of the yr.

Charities have warned such an increase might imply hundreds of thousands of households will battle to pay their vitality payments.

Simon Francis of the Finish Gasoline Poverty Coalition mentioned the typical family was paying 67% extra for his or her vitality in contrast with the winter of 2020-21.

The charity estimates that 12.1 million UK households are battling the price of their vitality payments and says they can not shoulder any extra value will increase.

“We at the moment are approaching the fifth winter of the vitality payments disaster and the time for tinkering with the worth cap is over,” he mentioned.