UK inflation: how much have food prices risen amid UK cost of living crisis - and will they continue to go up?

The UK cost of living is at its highest rate in decades, as inflation has hit a 40-year peak.

Rising prices have coincided with record erosion of pay, with worse set to come in October when the new Ofgem energy price cap is implemented.

Soaring energy prices have driven many of the price hikes, with the cost of food and drink particularly impacted by the rapidly increasing production costs stemming from the energy crisis - although NationalWorld analysis has shown some supermarket shelf prices have outpaced inflation.

Earlier this week, some of the UK’s key hospitality firms warned of mass pub closures unless the government intervenes on business utility bills.

So how much have food prices risen amid the cost of living crisis?

NationalWorld has analysed the latest Office for National Statistics CPI and data from the British Retail Consortium (BRC) to find out.

How much has the price of food and drink changed?

The CPI, which is the official mechanism used to measure UK inflation, showed the cost of food and drink has gone up 12.6% year-on-year as of July 2022.

So, if a food item cost £1 in July 2021, it was likely to cost an extra 12.6p by July 2022.

This figure also means food prices are outpacing overall inflation, which sits at 10.1%.

The following product categories have seen the biggest increases in average prices:

• Milk: low fat milk has gone up in price by 34%, while whole milk has risen 28.1%. It comes as farms battle huge production cost increases, with fuel prices and the cost of fertiliser spiralling. Earlier this year, major dairy supplier Arla warned consumers the era of cheap milk was over.
• Flours and other cereals: thic category has risen 29.7% in price, largely as a result of the Russia-Ukraine war (Ukraine being a major supplier of cereal crops). While the UK imports few commodities for human consumption from Ukraine, the global price shocks stemming from a reduction in the country’s exports have hit the UK.
• Butter: prices for the dairy product have risen by an average of 27.1% compared to July 2021. The reasons for these hikes are broadly the same as the ones behind the rise in milk prices. It has been seen most visibly in the increases to Lurpak’s supermarket shelf price.
• Pasta products: a key base for UK meals, pasta and couscous saw their prices go up 24.4% year-on-year as a result of the continuing effect of poor durum wheat harvests in Canada in 2021, as well as bad weather during the planting season in Italy at the end of 2021 and the Ukraine crisis (Ukraine also being a major exporter of durum wheat).

Not every product category has been impacted to the same extent as these foods, but all categories have seen at least some inflation - much of it in double-digit percentages.

Chocolate prices have gone up by just 4.2%, while other confectionary is only 4% more expensive than the previous year.

But to put these rises in perspective, they are still well above where food price inflation (or rather, deflation) was last year, when prices were falling back 0.5% on average.

While the CPI is the UK’s official benchmark of inflation, there are other trackers of how much food prices have gone up by.

NationalWorld has set up its own tracker of supermarket value ranges, which shows prices for some of the UK’s cheapest staples have risen dramatically so far in 2022.

Research by consumer watchdog Which? also found prices of some key food and drink items had rocketed since the Covid pandemic.

Meanwhile, the British Retail Consortium (BRC), which represents most major UK supermarket chains, runs a Shop Price Index with data analytics firm Nielsen.

Measuring a basket of 250 essential food and drink items and another 250 basic non-food items between 1 August and 5 August, this tracker has found food inflation is at its highest since the 2008 financial crisis.

It reached 9.3% - a 2.3 percentage-point leap on July 2022’s findings and the highest food inflation rate recorded by the index since August 2008.

Fresh food led this surge, rising in price by 10.5% against the year while ambient food prices went up 7.8%.

BRC CEO Helen Dickinson said the rises were most acute in milk, margarine and crisps.

“The war in Ukraine, and consequent rise in the price of animal feed, fertiliser, wheat and vegetable oils continued to push up food prices,” she said.

“The rise in shop prices is playing into wider UK inflation, which some analysts are predicting could top 18% in 2023.

“The situation is bleak for both consumers and retailers, but retail businesses will remain committed to supporting their customers.”

The BRC chief executive said her members would continue to offer discounts to vulnerable groups, expand their value ranges, fix the prices of essentials, and raise staff pay.

But she also warned supermarkets could only shoulder some of their cost increases - a suggestion that further price rises are in store for consumers.

Dickinson added: “The new Prime Minister will have an opportunity to relieve some of the cost burden bearing down on retailers, like the upcoming increase in business rates, in order to help retailers do more to help their customers.”

Will food prices continue to rise this year?

According to the BRC’s data partner for its tracker - NielsenIQ - food price rises will continue until at least 2023.

“Inflation continues to accelerate and shoppers are already cautious about how much they spend on groceries, with a fall in volume sales at supermarkets in recent months,” said Mike Watkins, head of retailer and business insight at the data analytics firm.

“We can expect this level of food inflation to be with us for at least another six months but hopefully some of the input cost pressures in the supply chain will eventually start to ease.

“However, with further falls in disposable incomes coming this autumn as energy costs rocket again, retail spend will come under pressure in the all-important final quarter of the year.”

The final quarter of the year - running between October and December - is known as the ‘golden quarter’ by retailers as it contains the Christmas shopping period, as well as Black Friday, when sales tend to be at their highest.

Assessments of where overall inflation will be at the end of 2022 and beginning of 2023 range between 18% and 22% - largely as a result of the energy crisis.

With continued uncertainty surrounding how long the conflict in Ukraine and how long its impacts on the price of fuel, energy, food ingredients and fertiliser will last for, it’s impossible to say when food prices will stop increasing.

The climate crisis could also play a role in inflating food prices at any moment.

Drought conditions across Europe have threatened future yields of key foodstuffs like potatoes and olive oil, while the increasing liklihood of extreme weather events puts future crop plantings and harvests at risk.

Meanwhile, food producers and vendors have also seen wages inflate since Covid-19 and Brexit as a result of widespread staff shortages - an additional cost burden which is likely to add to the price of production and transportation.

What is clear is that supermarkets are changing the way they sell products to us as a result of the changing spending habits has brought about and retailers’ own cost pressures.

Data firm Kantar has revealed supermarkets have reduced the number of promotions they offer compared to the last major cost of living crisis - the 2008 financial crisis - and are instead pointing shoppers towards ‘everyday low prices’ guarantees, including their value ranges.

Why are these food price rises an issue?

The big problem with rising food prices is they’re not happening in isolation.

Energy bills rose for millions of UK households in April and the cost of filling up your car has risen sharply.

At the same time, wages are failing to keep up with inflation and are now taking more of a hit thanks to tax hikes.

These issues particularly affect poor people, who spend a bigger proportion of their income on energy, according to the Institute for Fiscal Studies (IFS).

Research by the Food Foundation has shown UK food poverty has grown 57% since January, with 7.3 million adults and 2.6 million children unable to reliably access enough affordable and nutritious food.

The government has introduced several measures it says will be enough to tackle the crisis, including several cost of living payments.

But issues with food costs pre-date the current squeeze crisis.

A survey conducted by food industry-led healthy eating campaign Veg Power that covered the year to February 2022 found 26% of families and 49% of households earning under £30,000 a year were buying fewer fresh vegetables due to food price increases.