Food inflation eases for tenth consecutive month

Food inflation appears to be making a consistent decline, with the Office For National Statistics (ONS) announcing that the annual rate of inflation for food and non-alcoholic beverages has now fallen for 10 consecutive months. In fact, in January 2024, food inflation dipped to seven percent, down from eight percent in December 2023.

New Food has been keeping its readers updated with food inflation rates and notably, in March 2023, it hit a high of 19.2 percent. This was the highest food and non-alcoholic beverage inflation had been in over 45 years.

However, fast forward to recent months, ONS has revealed that monthly prices for food and non-alcoholic beverages fell by 0.4 percent between December 2023 and January 2024, compared with a rise of 0.6 percent a year ago.

Food inflation at highest level in over 45 years

Highlighted in its announcement, ONS shared that monthly food prices (excluding non-alcoholic beverages) dropped by 0.4 percent. Previously, this figure had not taken a dip since September 2021.

Kris Hamer, Director of Insight of the British Retail Consortium, said: “There was some good news for households, as food inflation fell for the tenth consecutive month, with condiments and dried vegetables seeing large month-on-month falls in price.

Looking at specific categories driving the downwards shift, ONS found that bread and cereals played an important role, with prices dropping by 1.3 percent. Specifically, chocolate biscuits, cream crackers and sponge cake were found to provide key negative contributions.

ONS went on to state that “the slowing in the annual rate was fairly widespread across the division”. In fact, looking at the 11 food classes, a total of seven provided a downward contribution. Additional items that drove the drop were home cooking sauces, instant coffee and potato crisps.

The Food and Drink Federation’s (FDF) Director of Sustainability and Growth, Balwinder Dhoot, defined the drop in food inflation as “encouraging”.

“Any reduction is important to households struggling to afford higher food bills, and for businesses who are paying higher salaries at a time when they are continuing to streamline production costs to deliver competitive prices for shoppers,” explained Dhoot.

However, the Director of Sustainability and Growth at FDF shed light on how agricultural yields are “persistently impacted” by unpredictable weather patterns and flagged that “ongoing navigation challenges in the Red Sea, coupled with rising shipping costs, may soon exert pressure on energy prices, and, therefore, on food prices, given the energy-intensive nature of the food and drink industry.

“The extent of this impact hinges on the duration of ship diversions from the Suez Canal and any escalations in the Middle East,” continued Dhoot.

But how should government be supporting food and drink manufacturing during a time where food inflation still remains high? Well, according to Dhoot, “the government must reduce unnecessary regulatory burdens and urgently reassess costly ‘not for EU’ labelling requirements for food sold in Great Britain.”

Meanwhile, Hamer urged that, with the headline inflation rate failing to fall for the second consecutive month, “there is no space for complacency.

“Government should recognise the cumulative impact of their policies – from rises in business rates to its new packaging levy – at a time when minimum wages are seeing the biggest rise on record and border checks are being implemented. Ultimately, if these costs continue rising unabated, it is inevitable that they will filter back into the price paid by households,” concluded Hamer.

Stay updated with New Food to hear more about the impacts of inflation on the sector.