UK food price inflation set to hit 20%, Citi forecasts

Individuals store at market stalls, with skyscrapers of the CIty of London monetary district seen behind, in London, Britain, January 15, 2021. REUTERS/Toby Melville

LONDON, June 22 (Reuters) – British meals worth inflation seems to be on track to hit 20% within the first quarter of subsequent 12 months, U.S. financial institution Citi predicted on Wednesday after the most recent official knowledge pointed to additional worth rises within the pipeline.

General shopper worth inflation hit a contemporary 40-year excessive of 9.1% in Might, as rising meals prices – particularly for bread and meat – took over from surging power costs as the primary driver of the most recent improve in CPI. learn extra

Whereas Russia’s invasion of Ukraine is disrupting provides of grain and vegetable oil, meals costs extra broadly have been pushed up by poor climate and rising power costs, which improve the price of gas, transport and fertiliser.

Meals and non-alcoholic drinks costs paid by customers in Might had been 8.7% increased than a 12 months in the past – their largest improve since March 2009 – and producers’ ingredient prices are rising much more quickly.

The costs producers paid for home meals supplies is up 10.3%, whereas imported meals prices – which account for nearly half Britain’s consumption – had been 20.5% increased, the biggest rise since December 2008.

“Meals inflation overshot our forecasts. We now count on worth progress right here to peak at somewhat over 20% in Q1 2023, with producer worth inflation right here persevering with to speed up,” Citi economist Benjamin Nabarro wrote in a observe to purchasers.

Final week trade forecasters the Institute for Grocery Distribution (IGD) predicted meals worth inflation would peak at 15% within the coming months, and mentioned some households had been already skipping meals. learn extra

Surging meals costs are a selected concern for Britain’s poorest households, who spend a better proportion of their revenue on meals. Supermarkets have reported customers buying and selling all the way down to cheaper ranges. learn extra

Citi mentioned the visibility of rising meals costs was additionally more likely to put higher upward stress on wage calls for than different sorts of inflation – a priority for some officers on the Financial institution of England who fears massive pay rises would possibly entrench inflation.

Reporting by David Milliken

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