Higher food prices 'baked in' as shoppers seek inflationary relief

“If my son leaves anything on his plate then I will eat that. If not, I just eat toast most days now.”

Like that parent, thousands throughout Scotland are struggling to put meals on the table as the cost of food has soared through a combination of surging energy prices, the war in Ukraine, Brexit, and more recently, the impact of poor weather in North Africa and Southern Europe. Latest figures from the Office for National Statistics put the annual pace of food inflation at a 45-year high of 19.1 per cent in March.

“You’ve got every single factor combined that has just made it horrific,” explains Stewart McCallum, head of food and drink at accountancy group RSM. He predicts that grocery price increases will ease more slowly than the current headline CPI inflation rate of 10.1%, which is expected to start dipping “considerably” towards the end of this year.

Commodities and staples have been hit hardest, with official figures showing that oil and cheese were up by 49% in March on the same period a year earlier, milk by 38%, sugar by 32%, eggs by 28%, chicken by 25%, and white bread by 21%. This has put the greatest pressure on the lowest-earning households that spend a bigger proportion of their income on essentials.

The impact of this on day-to-day lives has been reported by virtually every organisation tasked with charitable support in Scotland.

Despite food bank advice usually peaking in December, Citizens Advice Scotland said most recent figures from across its 59-strong network are “indicative of an ongoing crisis”.

“Since December 2021, advice in this area has been climbing,” the group said.

“More clients than ever before received food bank advice from a bureaux in March 2023, exceeding 1,800 total unique clients. Advice in this area increased 29% from the same time last year, 96% from March 20/21, and 43% from March 19/20.”

Similarly, the Trussell Trust said last month that people who “never needed help in their lives” have been turning to the charity for assistance. Its 43 Scottish food banks handed out a record 250,000 parcels during the year to the end of March.

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Marion Davis of One Parent Families Scotland said food banks have become “part of the infrastructure” of support that should be coming from government. Her group has also seen a “huge influx” in calls for help.

“Just looking at our survey, we’ve got parents saying they don’t eat breakfast, and the cost of packed lunches is ‘crazy’,” Ms Davis said.

“Another one said they could only afford to feed their two children most days – ‘I am only eating cups of soup, telling them I am on a diet to explain why I am not eating’. It’s really heart-rending stuff.”

The lowest earners are not the only ones feeling the strain. Market research group Kantar has reported increased footfall at all the major retailers as consumers shop around hunting for the best bargains.

Its latest figures – which are more up-to-date than official ONS statistics – show that grocery inflation dipped slightly to 17.3% during the four weeks to April 16. Meanwhile, sales of the very cheapest own-label value lines soared by 46% on the same period a year earlier.

“The latest drop in grocery price inflation will be welcome news for shoppers but it’s too early to call the top,” Kantar head of retail Fraser McKevitt said. “We’ve been here before when the rate fell at the end of 2022, only for it to rise again over the first quarter of this year.”

Initial declines in food inflation will be driven by the effect of measuring against the high rates seen last year. Mr McCallum of RSM points out that falling inflation doesn’t mean lower prices, but rather that prices aren’t increasing as quickly.

“A lot of that inflation is going to be baked in,” he said. “Global commodities will remain a factor but I don’t think we’re going to see negative inflation, which we would have to if prices were to come back down to where they were a year ago.”

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He added: “We’ve got to hope for a really good harvest, a reduction in the horrific conflict in Ukraine, and UK consumers being sensible, as we have been in the last couple of years, in terms of how we have managed balance sheets.”

Martin Kennedy, president of the National Farmers Union (NFU) Scotland, said government and retailers need to focus on creating a system of sustainable food production that will make the UK less reliant on imports. He argues that with approximately 40% of all food consumed here coming from abroad, the loss of home-grown produce will make the UK susceptible to future inflationary shocks triggered by external events.

“We took our eye off the ball with energy and energy is costing a fortune now and the reason that’s the case is because we’ve been reliant on others from other parts of the world to produce it for us because it’s cheaper,” he said. “If that was to happen with food, that would be a serious situation.”

Tomorrow: "We cannot be held to ransom for food, we need to be able to produce it ourselves"