Call for government support as price of food rises at fastest rate since 2008 financial crash

The rise marks a new records according to the British Retail Consortium (BRC) and market research firm NielsenIQ.

Fresh food prices rose by 10.5%, the highest rate since September 2008, when the global financial system was on the brink of collapse.

The increase from a rate of 8% in July more than offset a slight decline in non-food inflation of 3% in August from 2.9% a month before.

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

The rise in shop prices adds to pressure on households already struggling to cope with the prospect of much higher household energy bills this autumn and winter as well as high petrol prices. Those on the lowest incomes are expected to be hit hardest by inflation because a larger proportion of their budget goes on essentials including food and energy.

BRC chief executive Helen Dickinson said: “The situation is bleak for both consumers and retailers, but retail businesses will remain committed to supporting their customers through offering discounts to vulnerable groups, expanding value ranges, fixing prices of essentials, and raising staff pay.

“However, as retailers also grapple with growing cost pressures, there is only so much they can shoulder.

“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.”

Rocio Concha, director of policy and advocacy with the consumer organisaton Which said there needed to be more government help.

She said that even before the latest increases, it found the cost of hundreds of popular grocery items had soared by more than 20 per cent in two years.

"People are responding in a range of ways, including in the most desperate cases having to miss meals, or resorting to food banks," she said.

“Budget ranges are becoming increasingly vital amid the worsening cost of living crisis, but our investigations have suggested that own-brand budget labels have become less available just as consumers need them most.

“The government must support those who are struggling – but supermarkets can also boost budget range availability across stores so people do not have to pay excessive prices for everyday essentials. They should be more upfront about costs and provide clear unit pricing to help shoppers to easily compare items.”

Soaring food prices were partly blamed for pushing UK inflation into double digits for the first time since 1982, with prices continuing to rise at their fastest rate for more than 40 years.

Inflation hit 10.1% in the 12 months to July, up from 9.4% in June, the Office for National Statistics (ONS) said.

Soaring living costs are eating into household budgets, with prices rising faster than wages.

Energy, petrol and diesel costs are also contributing to inflation. But food and non-alcoholic drinks were the largest contributor to rising prices in July, according to the ONS.

The price of bread, cereals, milk, cheese and eggs rose the fastest, while the cost of vegetables, meat and chocolate were also higher.

Mike Watkins, head of retailer and business insight at NielsenIQ, said: “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.

“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.”

Some experts are saying price rises around the world are the result of a “broken” food system that is failing the poor and concentrating power and profits in the hands of a few,.

Rising food prices are causing widespread suffering in developing countries, and even in the rich world the combination of high food and fuel prices threatens hardship for millions.

Food prices have surged by more than 20% in a year and about 345 million people are estimated to be experiencing acute food insecurity, compared with 135 million before the Covid-19 pandemic.

Oxfam says the current crisis was “the latest in a long series of failures in the global food system”, which has been made even more fragile recently owing to extreme weather and the impacts of the climate crisis, economic upheaval and the pandemic.

Meanwhile, debt help charity StepChange said the proportion of new clients in energy arrears is growing, even before the “catastrophic” impacts of the October price cap hike are felt.

StepChange said one in five (20%) clients who completed full debt advice in July said the cost of living was their primary reason for contacting StepChange, up from 18% in June.

It also said that the proportion of new clients in gas arrears rose from 23% in June to 26% in July, while the proportion of those in electricity arrears was up from 28% in June to 30% in July.

Phil Andrew, StepChange said: “It’s no surprise to see cost-of-living pressures continue to take their toll on our clients’ finances.

“What’s most concerning is the new rise in energy arrears we’re seeing in the middle of summer when energy use is typically low, and the catastrophic effects of October’s new energy price cap are yet to take hold.”

Last week, regulator Ofgem confirmed an 80% rise in the energy price cap for around 24 million households in England, Scotland and Wales, sending the average household’s yearly bill from £1,971 to £3,549.

The cap will come into effect on October 1, but Ofgem has warned some suppliers could start to increase direct debits before then to spread costs.

It will remain in place until December 31, when it will be adjusted again, with forecasts suggesting bills could surge again to around £5,400 in January and around £7,000 in April.