Food inflation hits 4.9 per cent as energy bills rise by one-fifth

Family of four can expect weekly food bill of £100 to increase by £5, which adds up to £260 a year

The cost of living has continued to soar in the past 12 months, with further price rises in food and energy expected to cost consumers hundreds of pounds more over the coming year.

Click HERE to view graphic (142k jpg)

Despite the apparent allure of supermarket bargains, a typical basket of fresh produce – including bread, meat and vegetables – now costs 4.9 per cent more than it did in 2010. And it is rising at its fastest rate in almost two years.

Scottish Power also signalled yesterday what is expected to be the first in a fresh wave of domestic-energy price rises as it announced that its average gas tariff would increase by 19 per cent from August, with electricity also up 10 per cent.

The latest gloomy figures come despite an overall slowdown in shop-price rises for non-food goods, which fell slightly to 2.3 per cent. But in a further sign of the sluggish state of the economic recovery, this was blamed largely on weakening demand.

The latest shop-price index from the British Retail Consortium (BRC) and Nielsen blames the rising cost of food on the growing demand for commodities in the developing world, particularly in China, combined with failing harvests and the runaway cost of oil, which affects all aspects of food production – particularly transport and processing. A family of four can expect to see a weekly food bill of £100 increase by £5, adding up to £260 a year.

Despite predictions by the Bank of England that overall inflation is set to peak at 5 per cent this year before falling, the cost of food continued its upward march, rising again last month by 0.2 per cent compared with April. Increasingly expensive fresh produce accounted for much of that.

To make matters worse, farmers in the UK, who in areas such as East Anglia have seen only a fifth of normal rainfall in the past six weeks, are expecting this year's harvest to be down 15 per cent – further driving up the costs of staples such as bread.

This coincides with the worst drought for 50 years in China, which has recently switched from being a net exporter to an importer of grain and rice. And conditions are dry in northern Europe and the southern United States.

But it is the growing demand from increasingly affluent consumers in emerging economies that is putting pressure on the wallets of British consumers. While commodities prices form only a small part of the final cost paid at supermarket checkouts, the cost of corn on the international market is up 112 per cent on last year, while coffee is up 57 per cent, wheat 72 per cent and sugar 51 per cent.

Richard Lim, a BRC economist, said consumers were doing what they could to cope with the price rises, while supermarkets were also being squeezed because they could not pass the costs on as quickly as they increased. "There has been a fall in the volume of food sales and there has been a definite trend for consumers to search around more and to look for deals or to trade down from premium ranges to value products," he said.

"The largest cost faced by retailers is the cost of the goods they sell. Some of this will inevitably be passed on to the consumer because supermarkets operate on such thin margins and the market is so competitive. Retailers are using promotions and discounts to take out the cost of inflation."

Terry Jones, communications director at the Food and Drink Federation, said the new data should act as a wake-up call for policy makers to invest in new technology to improve yields and reduce food-price volatility. "The UK is now a price taker in the global market – the rest of the world sets the price for our farms," he said.

Watchdog groups reacted angrily to the rise in energy prices, which follows another increase seven months ago and findings by Ofgem that the big six energy companies hiked prices faster than they dropped them in response to international market conditions.

Sport
football
News
Hillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
Sport
wimbledonScot will face Ivo Karlovic next
Life and Style
ebookNow available in paperback
ebooks
ebookA delicious collection of 50 meaty main courses
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Food & Drink

    Recruitment Genius: Web Developer - Junior / Mid Weight

    £15000 - £25000 per annum: Recruitment Genius: To support their continued grow...

    Recruitment Genius: Transportation Contracting Manager

    £33000 - £38000 per annum: Recruitment Genius: A global player and world leade...

    Recruitment Genius: Hotel and Spa Duty Manager

    £18000 - £24000 per annum: Recruitment Genius: If you are friendly, sociable, ...

    Recruitment Genius: Payroll and Benefits Co-ordinator

    £22300 per annum: Recruitment Genius: This museum group is looking for a Payro...

    Day In a Page

    Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

    Is this the future of flying?

    Battery-powered planes made of plastic, and without flight decks
    Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

    Isis are barbarians

    but the Caliphate is an ancient Muslim ideal
    The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

    Curse of Brink's Mat strikes again

    Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
    Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

    'The ministers talk to us about miracles'

    Why Greeks are cynical ahead of the bailout referendum
    Call of the wild: How science is learning to decode the way animals communicate

    Call of the wild

    How science is learning to decode the way animals communicate
    Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

    'The economic collapse has happened. What is at risk now is democracy...'

    If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
    The science of swearing: What lies behind the use of four-letter words?

    The science of swearing

    What lies behind the use of four-letter words?
    The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

    The Real Stories of Migrant Britain

    Clive fled from Zimbabwe - now it won’t have him back
    Africa on the menu: Three foodie friends want to popularise dishes from the continent

    Africa on the menu

    Three foodie friends want to popularise dishes from the hot new continent
    Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

    Who will fill Donna Karan's boots?

    The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
    10 best statement lightbulbs

    10 best statement lightbulbs

    Dare to bare with some out-of-the-ordinary illumination
    Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

    Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

    Briton pumped up for dream meeting with world No 1
    Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

    Nick Bollettieri's Wimbledon Files

    It's time for big John Isner to produce the goods to go with his thumping serve
    Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

    Dustin Brown

    Who is the German player that knocked Nadal out of Wimbeldon 2015?
    Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

    Damien Martyn: 'England are fired up again, just like in 2005...'

    Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test