Food prices - the debate rumbles on...

By: Dean Best - 15 January 2008 15:50

Are consumers really seeing higher shopping bills as they head through the checkout at UK retailers?

The anecdotal evidence suggests prices are going up and, today (15 January), a couple of key UK suppliers said they had managed to renegotiate prices in a bid to counter rising commodity costs.

Uniq, the convenience food group, said it had recovered “the exceptional increases” in dairy and wheat costs it had seen last summer.

Northern Foods, owner of brands including Fox’s biscuits and Goodfella’s pizza, struck a similar tone.

And all this while data from the UK’s Office for National Statistics said that annual food inflation climbed to 7.4% in December - the fastest rate of increase since records began in 1992.

Alas, however, UK retailers, keen to reassure consumers anxious about their spending, beg to differ.

The British Retail Consortium said claims of “dramatic” increases in food prices were “alarmist”. Competition among food retailers were helping keep prices down, the BRC said.

“Anyone can price a limited and highly selective basket of goods and produce an inaccurate scare story,” the BRC’s director general Kevin Hawkins said.

"Poor harvests, unfavourable exchange rates and changing patterns of world demand have pushed up the price of some items but there is no food price explosion. The rate of food inflation is actually slowing while overall shop-price inflation is stable.”

Retailers, however, must be feeling the pinch. Caught between suppliers saddled with rising costs and anxious consumers wanting more value as they tighten their belts, retailers’ margins could face being squeezed.

These are testing times.

Comments on this blog post

Or as he might have said: “Anyone can price a limited and highly selective basket of goods and produce an inaccurately positive story." The BRC claims that competition among food retailers is helping keep prices down. Or, in other words, pressure from retailers on suppliers ought to do the trick. Just so long as retailers' margins don't drop and consumer prices don't rise enough to be no longer deniable.

Bernice Hurst, United Kingdom

Let us not forget that the BRC is trying to push an agenda of interest rate cuts to help its beleagured high street members, which will only fuel further inflation problems. No surprise then that they trying to convince us all there is no problem with inflation.

Chris, United Kingdom