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Western Morning News
Wednesday 12 December 2007
Food prices rock shoppers
Shoppers have been warned that food bills will eat up an ever greater chunk of their household spending if producer prices continue to rise at present rates - the fastest since 1993.
According to one survey, an average basket of fresh food now costs 23 per cent more than it did four months ago.
A report by The Grocer magazine reveals the cost of an average loaf of bread has risen three times this year, from 97p in January to £1.12 today. In addition, the price of butter has increased by 15 per cent in 12 months (to an average of 78p per 250g).
The Mysupermarket.co.uk website estimates that the average price of a six-pint carton of milk has increased by 22 per cent since December 2006, from £1.62 to £2.15.
The Office for National Statistics (ONS) this week said the prices that retailers are paying manufacturers, such as bakeries and dairies, for food products increased by 6.6 per cent in the year to November, the highest such rise for more than 14 years.
ONS figures showing the effect that inflation is having on food prices in shops will be revealed next week.
Figures published by The Grocer revealed a surge in prices since July; the cost of cherry tomatoes has rocketed by a third between October and November and the cost of grapes has risen by 21 per cent over the same time period.
The Good Food Guide this week claimed the average cost of a Christmas dinner at home will be about £16 per head this year, with poultry farmers also hit by the increased cost of grain.
The increases in "middle man" prices are mainly due to this year's weather and higher petrol costs, which increase the transportation costs. A wet year meant a lesser harvest, and grains are also in high demand for bio-fuels, resulting in less availability for animal feed and bread, which has pushed the price of a loaf up over £1.
Although news of increased food costs might irritate some shoppers this Christmas, food prices overall are at an all-time historic low. The National Farmers' Union (NFU) says the cost of food is finally returning to its fair price and consumers are beginning to place a higher value on their food.
South West NFU spokesman Ian Johnson said: "After the War people were spending 50 per cent of their income on food, now it's less than 10 per cent. Food has become cheaper and cheaper and 30 per cent of all food is thrown away, causing major problems.
"This has led to a culture that sadly doesn't value food and has put farmers out of business."
Mr Johnson said that although the cost of fresh produce had increased this year, the farmers themselves were not seeing huge profits, because the supermarkets maintained huge mark-up rates. He also said the Government had encouraged cheap food in order to maintain consumer spending, therefore helping to keep the economy buoyant.
"At last the light has dawned on the Government and the retailers who realise that if they want to keep their shelves stocked then they need to give producers better returns."
In Willand, near Exeter, this is putting pressure on leading chicken production firm Lloyd Maunder, which contracts Devonshire Poultry to rear 500,000 chickens a week** for supermarket sale. It is having to pay 40 per cent more for wheat feed this year than the same time last year.
Andrew Maunder, commercial director said: "The wheat crisis is global, but there are very immediate implications for the food and farming industries in the Westcountry. We're confident consumers will be willing to pay a bit more if they understand why the price increase is needed."
Robert Lanning, director of Devonshire Poultry, said chicken prices had dropped from about 3p a bird last year to less than 2p.
"Supermarket chickens priced at £2 have put enormous pressure on the industry. As a farmer we are seeing our margins get completely eroded, so despite the higher consumer prices we are only just keeping afloat."
For more press information contact Veronica Newport on 01363 866927 or veronica@n-pr.co.uk.