The ‘joint hottest summer on record’ continues to wreck havoc on UK food and drink prices, as food supply problems are predicted to carry on throughout autumn.
According to pricing company Simon-Kucher, summer heat and other effects around the world are impacting the cost of food and drink products in the UK, despite giving way to a ‘boon to sales’ in retail and hospitality.
While July’s Consumer Price Index figure came in at 2.5%, a ‘more moderate’ August has led the company to predict that inflation will stable around the 2.5% mark, warning that a ‘warm start to autumn may see a slight decrease in September.’
Key products to be hit by inflation include:
Dairy
Calculations by Simon-Kucher suggest there are now 13,600 dairy farmers in the UK, compared to more than 25,000 in 2000. Weather over the past few months has depressed yields across Europe, with many farmers using forage stocks intended for winter.
The supply of milk always falls in the latter half of the year as cows move indoors, so milk and cheese prices are expected to rise, mirroring the significant increase seen in the recent price of butter – up 17.6% than this time last year.
Cereals
Current indicator suggest prices for wheat and maize will increase over coming month - poor harvests will push up the prices of staple goods like bread and cereals, currently down 0.2% this year, but also meat in the longer term as farmers pay more to feed their animals.
The wholesale price of beef, having fallen by 15.2% during July as farmers rationed grazing land, has already recovered by 5.9% in the last three weeks, which is a trend set only to continue.
Rosalind Hunter at Simon-Kucher commented: “Food prices are one of the key costs for families and overall can have a big impact on inflation.
“After July’s heat, a moderate August leads us to predict inflation will be stable around the 2.5% mark, though a warm start to autumn may see a slight decrease in September.
“The UK sources food from a wide range of countries so the price impact of shocks in one specific country or region is tempered by supplies from others.
“So as long as you’re not set on a specific region for your favourite food or wine, the overall impact of the big ups and downs we are seeing for certain foods and wines should be moderate.”