On the 14th of February the Office for National Statistics (ONS) announced that the overall annual inflation for January 2024 was still at 4 per cent as in December 2023. However, it was also announced that the food inflation figure for January represented the first monthly fall in food prices since 2021 (BBC, 2024). This is very good news as food has been one of the leading sectors contributing to the higher-to-the-target overall price inflation. However, it is better to have a view of annual levels of inflation instead of monthly due to the presence of seasonality. Figure 1 above shows the evolution of the annual overall and food and drink price inflation.
Figure 1: Evolution of overall and food and non-alcoholic beverages price inflation 2021-23.
Source: Office of National Statistics (2024).
Both inflations in Figure 1 has been on the rise since 2021. However, the annual rate of inflation for food and non-alcoholic beverages grew faster after the first quarter 2022. In 2023, the annual price inflation for food and non-alcoholic beverages was almost twice that of the general price inflation for the economy. Even though, inflation declined in January 2024 when compared to the previous year, the rate is still higher than the overall price inflation in the economy. In fact, food and non-alcoholic beverage price inflation was about 50 per cent higher the overall national average of 4 per cent.
The above is not strange since the UK food and drinks sector has suffered significant setbacks due to recent unprecedented shocks to the agrifood sector. The effect of supply chain disruptions brought about by Brexit, the COVID-19 pandemic and the war in Ukraine has been long lasting. Labour shortage and high input prices have translated into high food prices worsening the cost of achieving affordable diet for consumers. It is believed that the recent hijack of cargo ships on the Black Sea would have worsen the already fragile food and drinks supply chain.
Figure 2 disaggregates the food and non-alcoholic drinks price inflation across its 11 food aggregates. There are marked differences on the rate of inflation of the 11 food categories.
Figure 2: Annual inflation for different food aggregates – January 2024
Source: Office of National Statistics
Note: The dashed line indicates the overall CPI inflation for January 2024.
Only two food aggregates had inflation levels below the national average (although still showing some inflation): milk, cheese, and eggs, and fish. Sugar, jam, syrups, chocolate and confectionery had the biggest inflation when compared to average for the category. Though high, this could have the benefit of steering consumers away from consuming sugar-dense foods. Unfortunately, inflation rates for fruits and vegetables are still high which could offset policies like the ‘five-a-day’ campaign aimed at increasing fruit and veg consumption to 400 grams per person per day.
In summary, there have been progress and food inflation is decreasing as a result of the slow return to normality of the food supply chains but probably it will still remained above to the average inflation for a couple of months more.
