There are growing concerns among UK consumers that the COVID-19 pandemic-spurred disruptions in the global food supply chain may cause rises in food prices soon as the country’s Consumer Prices Index (CPI) rose by 2.5% in June 2021, the highest level for three years.
A news report sourced by our correspondent from the conversation.com, an online medium, indicated that even consumers’ concerns about inflation rates had heightened as the UK economy begins its much-needed recovery from the effects of the pandemic.
The report stated that though the headline rate does not always show the differences between the various things consumers buy, such as clothes, cars, leisure and food, the country’s food prices have actually been falling over the past few months compared to where they were a year ago.
However, the online medium reported that there were fears that the food prices could rise steeply soon due to a combination of some external factors, particularly shocks to the supply system.
It further clarified: “In the UK, food accounts for around 10% of total household expenditure. Everyone has to eat, so everyone is affected by price changes.
“That said, the impact of rising food prices varies according to income – richer households are more able to absorb rising costs. Poorer households, who spend a greater proportion of their income on food (nearer 15%), are much more affected by it.
“Overall, demand for food is relatively constant – we may change our consumption patterns between shops, brands and sometimes types of item (fresh or long-life orange juice for example) but in the main, our total demand is stable. This means that price changes are often driven by supply factors. These can be short or long-term, and driven by either domestic or global factors
A short-term cause might be the weather causing droughts or floods which reduce output from farms, forcing prices up. Long-term factors include climate change or planting crops such as coffee or cocoa which take several years to reach maturity”, the medium added.
Noting that people do not generally eat the initial food products of the agricultural sector but rather tend to eat products that have been through a chain of processors and retailers, the online medium stated that people should be wary about making a direct link between weather effects on agricultural output and the prices we pay in the supermarket or corner shop.
It listed some of the cost of food products as including many non-edible aspects such as packaging, transportation, marketing , competition between retailers and so on as they seek to keep customers loyal by dropping prices where possible.
The news medium further noted that with the UK importing about 40% of the food it consumes ranging from items such as bananas, tea and coffee through to bacon, butter and lamb, supplies from abroad can be greatly affected by shocks to the system, such as the delays experienced during the pandemic, or trade policy changes.
“All these can help drive up prices, as can fluctuations in currency exchange rates”, it stressed.