Market News

(Bloomberg) --

UK food inflation is likely to accelerate to 15% this summer, the highest level in more than two decades, as Russia’s invasion of Ukraine adds more strain to dislocated supply chains.

Over the whole of 2022, food and drink prices are set to soar by 10% to 12%, according to a report by consumer group IGD. At the midpoint of that range, a family of four would need to spend about £516 ($623) extra on meals this year, it said. That outlook piles more woe onto British consumers who are facing a cost-of-living crunch as energy and other essentials surge. 

“This will undoubtedly leave many households -- and the businesses serving them -- looking to the future with considerable anxiety,” James Walton, chief economist at IGD, said in a statement. “We are already seeing households skipping meals, a clear indicator of food stress.”

Global food supplies have been strained by Russia’s invasion of Ukraine, sharply curtailing grain and vegetable-oil exports from a major world producer. The UK also faces challenges from its exit from the European Union, which is a key source of its food imports. British slaughterhouses and farms have also been hit by worker shortages and transport bottlenecks in the wake of Brexit.

UK food prices began rising late last year and posted a 6.7% annual gain as of April, the highest rate in a decade. The IGD analysis expects those gains to accelerate, peaking in the summer or autumn and persisting through the middle of 2023, it said.