The news that food and non-alcoholic beverage inflation is running at 18.2% in the UK is likely to eat into a "significant proportion of disposable income", McKinsey partner Kevin Bright has said.
Bright was commenting after the latest UK CPI figures indicated that food and beverage prices were rising at their highest rate for more than 45 years.
Difficult Choices
This was likely to lead to choices from households about what they can afford to buy, he added.
"When you drill down into where the price rises are occurring in the food category – a large portion are being driven by those containing grains, eggs, oil and certain proteins: bread (up 20.8%), pasta products and couscous (up 25.3%), eggs (up 32.5%), margarine and fats (up 30.4%) and pork (up 22.4%)," Bright noted.
Bright noted that the fact that retailers are also rationing items is likely to mean that prices will remain high for a longer period.
Elsewhere, rising prices in other essential categories such as clothing and footwear (up 8.1%) are adding to the pressure on consumers’ disposable income, which, coupled with slow wage growth, is adding to the pressure.
Read More: Nearly A Third Of UK Shoppers Prioritise Quality Amid Rising Cost Of Living, Study Finds
Increasing Pressure
“Today’s figures mean that many consumers will be further forced to make difficult decisions about what they can put in their baskets, with ever increasing pressure on the price of fresh food," Bright added.
“Looking to the long-term, retailers can explore opportunities to improve productivity, review their relationships and network of suppliers and take an intelligent approach to pricing and promotions.”
British Retail Consortium
Elsewhere, commenting on the high inflation figures, Helen Dickinson, chief executive of the British Retail Consortium, said, “While inflation is expected to subside later this year, prices are likely to remain elevated as the higher costs throughout supply chains become baked in.
"Retailers are committed to doing everything they can to keep the price of essentials low through expanding value ranges and offering discounts for vulnerable groups."
© 2023 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
