Annual food price inflation falling, but higher in the long term

Wednesday, 17 April 2024

In March 2024, annual food price inflation in the UK fell to 3.9%, down from 5% in February and well below the 19.6% a year earlier according to the latest Consumer Prices Index (CPI) published by The Office for National Statistics (ONS). Food price inflation remains ahead of overall CPI which was 3.2% for March 2024.

Key areas of food price inflation  

  • Bread prices rose by just under 1% in the year to March, likely enabled by lower wheat and energy prices. However, versus 2019, bread prices are 25.5% higher. This isn’t surprising given that energy costs remain above 2019 levels. The wet weather of recent months will make UK bread supply chains more reliant on imported wheat, which is more expensive than if the UK was to have a more typical harvest in 2024. This may well make it difficult for bread prices to fall. 
  • Overall meat prices rose 3.1% to year to March and 24.4% higher than in 2019. Meat production, especially poultry, continues to recover from both feed and energy cost inflation following the war in Ukraine. Whilst grain prices have fallen considerably, the declines are yet to fully translate into finished feed prices. Current strength on the beef and lamb markets are of course key factors in the broader protein category, but recovery in the poultry sector needs close monitoring as a key source of competition.  
  • Egg prices rose 3.9% in the year to March and are a staggering 42% above the 2019 average. At the height of food price inflation, eggs were a frontline product with many retailers with empty shelves. The market has had to work hard to provide producers with the right economic signal. Feed costs, retail / regulator attitudes toward production systems and risks from avian influenza will be just some of the complex drivers in this sector.  
  • Whole milk prices fell 11.1% to the year to March, but since 2019 are nearly 48% higher. This spring’s delays to turning cows out to fresh grass may well soften the seasonal production peak, which may stifle further falls in prices. 
  • Fruit prices rose 3.6% in the year to March. Although increase versus 2019 was 19.3%, this is relatively low compared to other food categories. 
  • Potatoes have seen some of the highest annual inflation of the food staples at 7.6% in March but only 15.2% versus 2019. Considering planting weather this spring, further increases won't be surprising. 

Other interesting categories – annual inflating in March 2024:  

  • Sugar +14.2% 
  • Chocolate +9.2%  
  • Olive oil +38.9% 
  • Margarine and other vegetable fats -1.2% 

Closing comment 

Food product markets still have a legacy of the last few years of inflation within them and noticeably above 2019 levels. Recent months of wet weather will have a differing impact, depending on how easily substitutes can be imported, the state of the global market and consumer sensitivity to higher prices.  

Image of staff member Jack Watts

Jack Watts

Head of Economics - Strategy

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