Skyrocketing sugar prices and fruit and vegetable shortages drive UK food inflation

28 Mar 2023 --- The spike of global sugar prices coupled with the shortages of fruits and vegetables has driven the UK to historical inflation rates. Food inflation accelerated to 15% and 17% for the fresh food category, the highest data points ever recorded by the British Retail Consortium, which tracks food prices since 2005.

The Office for National Statistics, which has longer historical records, revealed earlier this month that prices for food and non-alcoholic drinks are soaring at the highest rate since 1977.

“Shop price inflation has yet to peak. As Easter approaches, the rising cost of sugar coupled with high manufacturing costs left some customers with a sour taste, as price rises for chocolate, sweets and fizzy drinks increased in March,” says Helen Dickinson, chief executive of the British Retail Consortium.

Nonetheless, some retailers that imposed buying limits on vegetables and fruits – such as tomatoes and cucumbers – started removing their purchasing caps, signaling the worst of the shortages is over.

Sugar high
The UN Food and Agriculture Organization flagged, earlier this month, that sugar prices are shooting up due to concerns about lower export availability from India amid strong global import demand for the commodity.

Sugar commodity prices rose 6.9% in February, when compared to January, reaching their highest level since February 2017.

“Fruit and vegetable prices also rose as poor harvests in Europe and North Africa worsened availability, and imports became more expensive due to the weakening pound,” she continues.

Furthermore, some UK growers did not put down crops in autumn due to high-energy crops, Jim Winship, director of the UK Pizza Pasta & Italian Food Association, revealed to FoodIngredientsFirst last month.

Sugar commodity prices rose 6.9% in February, their highest level since 2017.However, Dickinson is hopeful that some price relief might be coming, “food price rises will likely ease in the coming months, particularly as we enter the UK growing season, but wider inflation is expected to remain high.”

Combating inflation
Some retailers are locking down prices on products to keep prices in check. According to the consumer association Which?, Morrisons has locked the price of 1,000 products for at least eight weeks, while Tesco did the same for over a thousand own-brand products until Easter. 

In other moves, Waitrose cut the prices of 300 ‘everyday favorite’ own-label products by an average of 14%.

“Retailers continue to work hard to keep prices, particularly of essentials, as low as possible by expanding value ranges and offering discounts for vulnerable groups. Government must also minimize oncoming regulatory burdens, as these will drag on investment and ultimately contribute to higher prices for UK consumers,” Dickinson explains.

The UK government has been making some moves that will affect food prices.

The Genetic Technology Bill (Precision Breeding) received Royal Assent in England last week, which brings in a new law that will help develop foods with increased nutritional value, maximized flavor and longer shelf life.

The technology will also create more resilient crops, which will help farmers tackle climate change and reduce potential food shortages.

Consumers will have to pay more for alcoholic drinks starting in August, as the UK will raise duties. A 5% 500 ml bottle of non-draught beer or a 250 ml glass of still wine will cost consumers 5 pence more (US$0.06).

However, the new alcohol duties will come with some relief for pubs as the duty of draught products in pubs will cost 11 pence (US$0.14) lower than the duty in supermarkets. 

By Marc Cervera