Food inflation rate to peak in early 2023, then slow

Food inflation rate to peak in early 2023, then slow

Updated: 2 months, 28 days, 12 hours, 22 minutes, 8 seconds ago
A new forecast by grocery insight provider IGD suggests that the rate of food price inflation will peak at 17-19% in early 2023, then begin to slow over the next 12 months Food price inflation will be very broad, but most pressure on household budgets will come from meat, fruit and vegetables, dairy and bread

(London, Tuesday 8th November 2022): The rise in the cost of food and drink is set to reach a peak rate of 17-19% year on year in early 2023, before slowing over the subsequent 12 months.

Inflation will likely remain above zero at the end of 2023, although price reductions may occur beyond that point if market conditions permit. Harvests in 2023 and the value of sterling will be key factors.

This is according to the latest data released by IGD as part of its quarterly Viewpoint report series and presented at its Insight & Impact 2022 event, held today in the City of London.

In June of this year, IGD initially calculated that food price inflation would likely accelerate until autumn 2022, peaking at 14-16%, then dissipate by mid-2023.

However, major strategic changes have affected the food supply chain since June, including significant input cost pressures, a tight labour market, continued supply chain disruption and the ongoing war in Ukraine.

The outlook for food price inflation has therefore worsened, leading IGD to issue its revised forecast today.

As before, the bulk of inflation pressure on households is likely to come from four major product categories: meat, fruit and vegetables, dairy and bread.

James Walton, Chief Economist, IGD, said: “There is no doubt about it that this is a daunting prospect for both households and businesses. Already we can see the food industry pulling together and retailers putting themselves in the shoes of shoppers to understand how best they can support them during this difficult time.

“Whilst it’s clear that there are considerable global and UK-specific economic headwinds ahead, there is some light at the end of the tunnel, with food inflation expected to dissipate slowly during 2023.



Click chart to enlarge

Source: ONS and IGD calculations, November 2022

“Consumers will be looking to the food industry to keep prices affordable. We know that inflation will eventually come to an end, and we will start to see significant drivers of overall inflation begin to drop off over the coming months.



Click chart to enlarge

Source: ONS and IGD calculations, November 2022

“Food businesses will need to focus on maximising efficiency to deliver the best possible prices for shoppers and look for opportunities to bring prices back down, as soon as possible.” Find out more in our next Viewpoint report, coming out on 22 November.

Ends

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Notes to editors: IGD is an organisation of two interconnected communities. The profits from Commercial Insight are reinvested into Social Impact, which together work to drive change that makes a tangible difference for society, business and the individual. All content is owned by IGD. If you use or refer to any content in this press release, please credit IGD Follow us on Twitter:

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Social Impact from IGD is delivered in four key areas:

a. People – focussed on giving young people opportunities to develop their employability and life skills, and on building the knowledge and capability of food and consumer goods industry colleagues, to foster an inclusive and productive workforce;

b. Health – nutrition experts use the latest research and behavioural science to develop practical tools that help the whole industry. IGD is collaborating with and inspiring companies to adopt best practice and implement change;

c. Sustainability - focused on mobilising the industry to tackle climate change, reduce food waste, increase food surplus redistribution, develop sustainable packaging systems and accelerate the industry’s progress towards Net Zero;

d. Economics – supporting better strategic planning and decision making, for the benefit of consumers, through economic analysis and engagement with policy makers.

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