Rocketing food prices could leave Britain facing recipe for disaster

Britain’s cost of living squeeze is set to worsen with the highest global food prices in half a century lasting until 2023 as the gas crisis sends fertiliser costs soaring, experts predict.

Supply chain analysts said supermarkets cannot insulate shoppers from mounting cost pressures indefinitely after warning that a cold winter risks pushing food prices up even further.

Global food prices have rocketed to their highest levels since 1975 in real terms. They will increase next year and remain elevated into 2023, according to economists at BCA Research.

Prices are already above levels seen during the last food crisis early last decade, which sparked social unrest across the world.

Pressure on fertiliser prices is set to intensify this winter after the gas crisis fuelled a near tripling in the key food cost input to record highs.

Abdolreza Abbassian, economist at the UN’s Food and Agriculture Organisation, warned food producers “cannot afford to have a bad year ahead” as many crops are already in a “tight situation”.

“The big worry now is … what could be on the horizon for production in 2022 for crops that heavily depend on inputs, such as fertilisers,” he said.

“We may go through a temporary stand-up in prices for a while but it may not last too long if the high fertilisers [costs] start having a negative impact on production and yields ... you would be expecting that this higher input cost is eventually going to make a dent somewhere.”

Supply chain chaos, soaring fertiliser prices, higher shipping costs and worker shortages have combined to push food bills around the world in 2021. Food price inflation in the UK has been accelerating in recent months, hitting a 14-month high of 2.1pc in October, according to Kantar.

Robert Ryan, chief commodities and energy strategist at BCA, warned higher freight, fertiliser and fuel costs will be passed on to shoppers through higher food prices next year.

He said: “We should start seeing this feeding through and the longer we get this cold weather and elevated natural gas prices, the more of this is going to feed through over time.”

Mr Ryan added that food price pressures are likely to be increased by a 90pc chance of a La Niña weather pattern causing a colder winter.

Experts warned that persistently high prices will force grocery retailers to pass on even more costs to shoppers.

Prof Wyn Morgan, an expert on food economics at the University of Sheffield, said: “They cannot hold consistently rising costs all the time; it does start to affect their bottom line.

“They're in a good position at the moment but that won't last forever. If it is that continually elevated level, there needs to be an adjustment. There is a potential for [food price inflation] to rise and the problem with that is that it affects everybody.”

The UN estimates that the cost of global food imports will rise by 12pc to $1.7 trillion this year with poorer countries bearing the brunt of the pain. Food prices make up a far larger share of the inflation basket in developing economies compared to the UK, where it accounts for just a tenth of consumer prices.

David MacLennan, the head of US food giant Cargill, warned last week that food prices will remain high next year as worker shortages and supply chain problems persist. “I thought inflation in [agriculture] and food was transitory. I feel less so now because of continued shortages in labour markets.”

Source: The Telegraph