Dry weather pushes up UK food inflation as harvests suffer

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UK meals inflation has risen to the best fee in additional than a yr as dry climate hits fruit and vegetable harvests and pushes up costs, based on business knowledge.

The annual fee of meals inflation was 3.7 per cent in June, up from 2.8 per cent in Could and the best since March 2024, the British Retail Consortium mentioned on Tuesday.

Helen Dickinson, chief govt of the BRC, mentioned: “Within the UK, fruit and vegetable costs elevated because of the scorching, dry climate, decreasing harvest yields,” whereas costs of meat “have been impacted by excessive wholesale costs and dearer labour prices”.

The Met Workplace reported that this spring was the warmest and sunniest spring for the UK on report. This has been a blended blessing for farmers — early solar and warmth within the spring boosted yields of some recent produce like strawberries and tomatoes, however a scarcity of rainfall has confused arable crops equivalent to wheat and barley.

“From a UK perspective we’ve had enormous stress on out of doors manufacturing, and inside Europe notably there have been extremes of climate once more, so cumulatively that provides as much as price pressures within the provide chain,” mentioned Nigel Jenney, chief govt of commerce group the Recent Produce Consortium.

The UK imports 65 per cent of the recent produce it consumes, based on FPC.

Global food prices had been up an annual fee of 6 per cent in Could, based on the UN Meals and Agriculture Group index, with dairy costs up 21 per cent and vegetable oil up 19 per cent.

The BRC figures come forward of official UK inflation knowledge for June, to be revealed on July 16. BRC and inflation knowledge this yr have proven a pick-up in meals costs in contrast with most of 2024.

For Could, the ONS final month reported sharp month-on-month value will increase for meat, fish, dairy merchandise, chocolate and confectionery, contributing to annual inflation of 3.4 per cent.

The Bank of England expects inflation to stay greater than its 2 per cent goal for many of the yr, pushed by vitality and meals, although total wage development continues to outstrip the speed of value will increase.

Elevated meals costs might restrict the tempo of rate of interest cuts this yr as value development has a higher impression on family inflation expectations than different objects.

Markets are pricing in that the BoE will decrease borrowing prices by 1 / 4 level twice within the the rest of the yr from the current 4.25 per cent.

The BRC mentioned recent meals costs rose at an annual fee of three.2 per cent in June, up from 2.4 per cent in Could. The costs of ambient meals, which may be saved at room temperature, rose at an annual fee of 4.3 per cent in June, up from 3.3 per cent in Could.

Line chart of Annual % change of consumer price index showing UK food inflation accelerated in June

The rise in meals costs helped total store costs return to an annual fee rise of 0.4 per cent in June, from a 0.1 per cent decline in Could. Non-food costs dropped at an annual fee of minus 1.2 per cent in June from minus 1.5 per cent within the earlier month.

The BRC’s Dickinson mentioned retailers had warned of value rises for customers, citing greater employer nationwide insurance coverage contributions and nationwide residing wage prices launched in April, together with mounting geopolitical tensions and the results of local weather change.

“Inside three months of the prices imposed by final autumn’s Price range kicking in, headline store costs have returned to inflation for the primary time in near a yr,” she added.

Mike Watkins, head of retailer and enterprise perception at NielsenIQ, which helps compile the info, mentioned: “Whereas the present spell of fine climate helps to spice up demand at many retailers, rising costs might turn into a priority if client willingness to spend declines later within the yr.”

Extra reporting by Madeleine Pace