Dry weather pushes up UK food inflation as harvests suffer

Keep knowledgeable with free updatesSimply signal as much as the UK inflation myFT Digest — delivered on to your inbox.UK meals inflation has risen to the very best charge in additional than a 12 months as dry climate hits fruit and vegetable harvests and pushes up costs, based on business information. The annual charge of meals inflation was 3.7 per cent in June, up from 2.8 per cent in Might and the very best since March 2024, the British Retail Consortium mentioned on Tuesday.Helen Dickinson, chief government of the BRC, mentioned: “Within the UK, fruit and vegetable costs elevated as a result of sizzling, dry climate, decreasing harvest yields,” whereas costs of meat “have been impacted by excessive wholesale costs and costlier labour prices”.The Met Workplace reported that this spring was the warmest and sunniest spring for the UK on file. This has been a combined blessing for farmers — early solar and warmth within the spring boosted yields of some recent produce like strawberries and tomatoes, however an absence of rainfall has careworn arable crops similar to wheat and barley. “From a UK viewpoint we’ve had large strain on outside manufacturing, and inside Europe notably there have been extremes of climate once more, so cumulatively that provides as much as value pressures within the provide chain,” mentioned Nigel Jenney, chief government of commerce group the Contemporary Produce Consortium. The UK imports 65 per cent of the recent produce it consumes, based on FPC. World meals costs had been up an annual charge of 6 per cent in Might, based on the UN Meals and Agriculture Group index, with dairy costs up 21 per cent and vegetable oil up 19 per cent. The BRC figures come forward of official UK inflation information for June, to be printed on July 16. BRC and inflation information this 12 months have proven a pick-up in meals costs in contrast with most of 2024.For Might, the ONS final month reported sharp month-on-month value will increase for meat, fish, dairy merchandise, chocolate and confectionery, contributing to annual inflation of three.4 per cent. The Financial institution of England expects inflation to stay increased than its 2 per cent goal for many of the 12 months, pushed by power and meals, although general wage development continues to outstrip the speed of value will increase. Elevated meals costs may restrict the tempo of rate of interest cuts this 12 months as value development has a better influence on family inflation expectations than different objects. Markets are pricing in that the BoE will decrease borrowing prices by 1 / 4 level twice within the the rest of the 12 months from the present 4.25 per cent. The BRC mentioned recent meals costs rose at an annual charge of three.2 per cent in June, up from 2.4 per cent in Might. The costs of ambient meals, which could be saved at room temperature, rose at an annual charge of 4.3 per cent in June, up from 3.3 per cent in Might.The rise in meals costs helped general store costs return to an annual charge rise of 0.4 per cent in June, from a 0.1 per cent decline in Might. Non-food costs dropped at an annual charge of minus 1.2 per cent in June from minus 1.5 per cent within the earlier month.The BRC’s Dickinson mentioned retailers had warned of value rises for shoppers, citing increased employer nationwide insurance coverage contributions and nationwide dwelling wage prices launched in April, together with mounting geopolitical tensions and the results of local weather change.“Inside three months of the prices imposed by final autumn’s Finances kicking in, headline store costs have returned to inflation for the primary time in near a 12 months,” she added.Mike Watkins, head of retailer and enterprise perception at NielsenIQ, which helps compile the info, mentioned: “Whereas the present spell of excellent climate helps to spice up demand at many retailers, rising costs may turn into a priority if client willingness to spend declines later within the 12 months.”Extra reporting by Madeleine Pace