Recent data reveals that food prices experienced their initial monthly decline for the first time in two years. However, although the headline inflation rate has now started to slow, it’s important to note that we are not yet in a period of deflation; CPI is still at 6.7% and food inflation remains stubbornly higher at 12.1%.
The landscape we are now seeing is still volatile and mixed, with some categories continuing to see significant inflation while others have started to soften. We therefore continue to use every opportunity to mitigate the impact of inflation, ensuring we are buying as competitively as we can.
Prices of milk, cheese, and eggs decreased but with butchery production costs have remained high, mainly due to rising fuel and fertiliser expenses. The spike in natural gas prices is the key driver behind increased fuel and fertiliser costs, which might continue into the winter months.
Avian influenza has become a global issue; the extensive vaccination effort aims to reassure the trade, but the risk of another substantial outbreak remains a significant concern.
As we move into autumn and winter, changes in weather and temperature conditions mean we have to move out of local supply to Europe and further afield for seasonally sourced fruit and vegetables. This pushes inflation into the business, as it brings additional transport costs, import costs and higher pricing to ensure availability. Outside of this seasonal change in origin there are several other factors affecting autumn and winter pricing, some examples of which are detailed below.
UK key market movers (CPI)
The Consumer Prices Index (CPI) is a key measure of inflation in the UK. Movements in CPI give a high level overview of the key categories experiencing inflation. Below is a monthly snapshot of the top food commodity price inflation movements impacting the UK.
October 2023 - Percentage change over 12 months
The above data is from Office for National Statistics (ONS).
Key price movements by category:
Sources: A David UK, BBC UK, Birtwistles UK, Dole UK, Foodbuy.