Prices rose 6.9% in the year to August, down from 8.4% in July. Meat, potatoes and some cooking oil prices have risen less sharply. With grain exports from Ukraine in jeopardy, a rapid slowdown in price rises is unlikely. Ukraine accounts for almost a third of global grain exports and up until last month, a deal between Russia and other countries allowed the safe passage of grain out of Ukraine, but Russia has now pulled out of that deal, known as the Black Sea Grain Initiative. This, combined with India’s decision to place export restrictions on rice, means there are now dark clouds on the horizon. The overall food price inflation is expected to continue to fall, but prices could rise slightly on items like vegetable and sunflower oil as a result of the Black Sea Grain Initiative ending.
Supply chain risks
The retail trade association also blamed a rise in taxes on alcohol. The figures would have been lower still had the government not increased alcohol duties earlier this month.
The UK’s overall inflation rate in July was 6.4%. However, food price inflation remains at 13.4%.
Whilst that figure has dropped from a March high of 19.2%, high inflation rates had been more long lasting than expected. Global prices for certain commodities were starting to fall. However, some companies, in the face of uncertainty, had locked in higher prices when the war first started, which had led to higher prices on the shelves.
Separate research suggests that consumer trust in the grocery sector has fallen to its lowest level since the horsemeat scandal of 2013. Consumers are unhappy with retailers declaring large profits as they believe it shows that the retailers aren’t doing what they claim of ‘helping the nation during a cost-of-living crisis’.
The cost of the weekly shop as being on par with energy bills as the biggest worry for millions of households.