Soaring food prices in the UK, due to the severe floods that have hit parts of the country in recent weeks, look set to drive up inflation, according to research published over the weekend.
A report from the Centre for Economics and Business Research (CEBR) warned that the impact on prices due to rising food bills could lead to interest rate rises in the UK this autumn.
The report outlined the impact the wet weather could have on food prices and, by definition, general inflation in the UK.
Potato production is likely to be down 20%, the CEBR said, causing potato prices to double. Arable production could drop by 10%, while feeding costs for livestock will be higher.
“Food prices are already up by 4.6% this year after a period when food price inflation had been very low or even negative,” the CEBR said. “Seasonal foods represent about a third of the index. Excluding potatoes, it is likely that food prices will be up by an additional 3-4% in total, adding a further 0.3% to the consumer price index.”
However, the research body said the rise in food prices would not cover production losses incurred by farmers during the wet summer.
Moreover, the CEBR added: “For consumers, this [the rise in food prices] is a direct hit to their disposable incomes.”