Topline
British shoppers are seeing the cost of some staple groceries go down for the first time in more than a year as inflation falls to the lowest rate since last fall, research company Kantar said Tuesday, suggesting the cost-of-living crisis in the U.K. could be starting to ease—but food inflation in the U.K. is higher than in some other western countries.
Key Facts
Grocery prices in the U.K. rose by an annual rate of 11% in September, down from 12.2% in August—the lowest year-over-year jump in food prices since July 2022, Kantar said—the British Retail Consortium reported food prices declined month-to-month in September for the first time in two years, the Financial Times reported.
A few staples have actually dropped slightly in cost, according to Kantar, with a stick of butter falling by £0.16 over the last year following a 2022 surge in dairy prices.
Still, food inflation remains higher in the U.K. than in some of its peer countries: U.S. grocery prices in August were up just 3% year-over-year, dramatically lower than the same time the year before—August 2022 prices were up 13.5% compared to 2021.
Consumers in the United States also got some relief at the end of the summer, the latest consumer price index data shows, with groceries prices up an average of 0.2% month-over-month in August.
The European Union logged an annual food inflation rate of 8.8% in September, down from 9.7% in August 2023 and from 11.8% in September of 2022—though EU customers are still paying almost 30% more for groceries than in early 2021, according to ING.
In Canada, prices for food were up 6.9% in August on a year-over-year basis and down 0.4% month-over-month, though Prime Minister Justin Trudeau last month warned the five largest grocery chains in Canada they could be hit with new taxes if they didn’t do more to control the cost of food.
Key Background
Food prices have risen at a faster rate than the broader consumer price index for the last year in the United States and other wealthy countries. The problem is even more acute in the United Kingdom, contributing to a broader cost-of-living crisis as energy and housing costs also hit British residents. Food inflation is driven by shipping costs, rises in wages on the production line, the war in Ukraine and the rebound from the Covid-19 pandemic, which severely disrupted supply chains. Experts have warned volatility in global food prices could be the new normal, the New York Times reported, fueled by climate change, global tensions and other unpredictabilities. Prices of wheat are higher than they’ve been for most of the last decade since Russia pulled out of the Black Sea Grain Initiative, which previously ensured the safe passage of grain exports by sea during its invasion of Ukraine. Olive oil prices jumped 50% last month amid a drought in Spain, record-high temperatures and a pause in Turkish exports, and several crops like sugar, corn and soybeans struggled this summer due to heat and a lack of rain. India, which saw half its usual rainfall in its top cane-growing districts, is set to ban exports of sugar for the first time in seven years.
Big Number
23%. That’s how much food prices have risen since early 2020 in the United States.
Further Reading
Grocery inflation cools again as shoppers seek value during sunny September (Kantar)
Food Inflation Has Dropped Dramatically Since Last Year—But Many U.S. Households Still Say It’s Too High, Report Finds (Forbes)
Food Prices Outpace General Inflation: Here’s What You Need To Know (Forbes)
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