The rate of food price inflation will peak at 17-19% in early 2023, then begin to slow over the next 12 months, a new forecast by grocery insight provider IGD suggests.
The forecast finds 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.
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.
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 at 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.”
He added: “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.
“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.
