Startling Increase in UK Food Price Inflation

Because of rapidly rising commodity costs the UK has experienced its quickest rate of food price inflation this year during the month of August, according to the British Real Consortium. In particular, wheat and sugar are two key ingredients behind steeply increasing expenses for food makers.

According to Bloomberg:

“Food prices rose an annual 3.8 percent, up from 2.5 percent the previous month and the most since July 2009, the BRC said in an e-mailed statement today in London, citing a survey by Nielsen. Shop-price inflation accelerated to 1.7 percent from 1.5 percent.

“Food prices are gaining as producers pass along higher costs of raw materials, the BRC said. Wheat prices have soared 53 percent in the last three months. Inflation may be limited as consumers tighten budgets before the government’s planned spending cuts and shops reduce prices to lure customers.

“‘As shoppers return from their summer holidays, many will review household budgets again,’ Mike Watkins, senior manager of retailer services at Nielsen, said in the statement. ‘We can expect to see retailers putting together some strong autumn promotions to tempt shoppers.'”

Overall, three commodities — including wheat, sugar, and also dairy — may see price increases of roughly 20 percent each over the course of the year. Though overall the inflation is not near the 10 percent peak back in August of 2008, it’s a creeping added expense that UK shoppers will have to face. You can read more details in Bloomberg’s coverage of how UK food prices are increasing at their fastest pace in a year.


Rocky Vega,
The Daily Reckoning

The Daily Reckoning