In the last month of 2022, UK food prices hit record highs, and retail industry experts are warning the high inflation could continue into this year, worsening the problem created by surging energy bills.
This does not constitute advice and advice should be sought in all instances before acting on it.
According to the latest report from the British Retail Consortium (BRC) and Nielsen, December’s annual food inflation figures increased to 13.3%, up from 12.4% in November. Additionally, the BRC confirmed that this was the highest monthly rate on record since they began collecting data in 2005. The increased food prices were front and centre this holiday season, as many holiday celebrations focus on food, but many essential items set people back a lot more than they may have planned as Russia’s war against the Ukraine has continued to drive up energy costs globally.
Every link in the food chain has been impacted as prices for animal feed, fertiliser, and energy all contributed to higher prices on supermarket shelves. The BRC reinforced the popular position that costs would only continue to increase in 2023.
Overall inflation has also hit the highest level it has been since the early 1980s thanks to sky-rocketing gas and electricity bills. On top of that, manufacturing activity slowed down in December due to lack of production, orders, and employment. This marks the fifth consecutive month of shrinking UK factory output. It seems the knock-on effect from market volatility and rising costs is in full swing as both domestic and international demand remained weakened throughout 2022.
Of course, the increased costs are being felt by consumers and as a result households are tightening the purse strings, even cutting back on spending during the run up to the holidays and during the sales. When people should have been stocking up for Christmas, thanks to a record high rate of 15% inflation for fresh produce, many were doing all they could to save money.
In a bid to bring business back, many retailers are offering discounts on non-food products as they try to get rid of excess stock that built up throughout the year.
For more information on UK inflation and the impact on your personal finances, contact your adviser.