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UK food inflation reached a one-year high in May, increasing for the fourth consecutive month due to higher fresh food prices, according to industry data. This suggests continued pressure on household budgets.
According to the British Retail Consortium, food prices rose by 2.8% annually in May, up from 2.6% in April and the highest rate since May of the previous year.
Helen Dickinson, CEO of the BRC, highlighted that fresh foods were the main driver of the increase, particularly noting the rise in wholesale beef prices impacting red meat prices.
Retailers are facing an additional £5 billion in costs from higher employer national insurance contributions and minimum wage hikes implemented in April, Dickinson added.
Global food prices also saw a significant increase, with an annual rate of 7.6% in April, driven by a more than 20% rise in vegetable oil and dairy product prices.
Despite the rise in food prices, non-food items continued to experience deflation at -1.5%, resulting in an overall grocery price inflation rate of -0.1% in May.
The BRC data revealed a divergence between rising annual inflation for fresh food and a decreasing trend for ambient food products like canned goods.
The BRC’s findings precede official inflation data for May, set to be released on June 18. The data from BRC and other sources indicate a rise in food price growth compared to most of 2024, driven by higher wholesale food prices and increased business costs.
April’s data from the ONS showed significant month-on-month price increases for meat, oil, and confectionery, contributing to an overall inflation rate of 3.5%.
While inflation is expected to remain high, driven by energy and food prices, wage growth continues to outpace the rate of price increases.
Bank of England deputy governor Clare Lombardelli acknowledged the challenges posed by higher energy and food prices, emphasizing the potential impact on consumers as interest rates were adjusted.
Mike Watkins, head of retailer and business insight at NielsenIQ, noted that rising food prices present an additional hurdle to consumer spending, especially with increasing household expenses. He suggested that retailers may need to work harder to stimulate spending during the summer months.