Government policy is partly to blame for rapidly rising food prices. Now it must act

Eating is fast becoming an expensive activity. The research firm Kantar found that food prices rose by 2.7 per cent year on year for the 12-week period ending 26 December 2021, but 3.5 per cent over the last month.

So price rises are accelerating. They will probably continue to do so because there is no shortage of inflationary drivers and they aren’t slowing down. To the contrary.

The purchase, movement, storage and delivery of product is a major part of what the supermarkets do. Grocers are as much logistics businesses as they are retailers, and logistics businesses are facing cost pressures wherever you care to look.

They are having to pay flesh-and-blood drivers more, a story much discussed last year. Fuel is increasingly expensive too. Then there is Brexit, that great British carbuncle, gumming things up at ports and creating problems. The response of advocates to this is largely to stick their fingers in their ears and sing 19th-century patriotic songs at top volume. Which tells you all you need to know about these people.

Trouble is, that won’t make the mess go away, however much ministers might wish it were so.

Price pressures – labour shortages, energy costs and Brexit (again) – are affecting suppliers as well. While the supermarkets have clout – this is not an equal relationship – they are having to accept price rises from them too.

All this feeds through to the front of house. Combined, you have the recipe for a perfect storm, which is what the figures, derived from monitoring the prices of 75,000 identical products in the proportions purchased by British shoppers, clearly show.

This is a storm that is going to be blowing for some time. The grocery business is highly competitive. The margins of its leading lights are better than in some parts of Europe, but that doesn’t mean there’s much space for squeezing them.

Christmas saw sales comparable to a locked-down 2020 in terms of the overall figures, but that’s unlikely to appease shareholders, who are apt to fret about dividends and get snotty with executives when they warn of declining margins.

Most consumers can act to mitigate the impact if they choose to. They can wait for promotions. They can farm the shelves where products with fast-approaching sell-by dates are sold at a discount. They can cut down on brand names in favour of own-label products. They can scoot down to an Aldi or a Lidl.

The trouble is that people on the breadline are probably already doing that. They have no means of sheltering themselves from the food price tsunami, which is coming at a time when the prices of other essentials are also rapidly rising, notably energy.

“If you didn’t have enough to begin with, and you’re already struggling to afford the essentials, there comes a point where you can snip no further,” said the Joseph Rowntree Foundation’s Katie Schmuecker in a blogpost published last month that highlighted how inflation is pushing people into poverty.

Better-off families, she pointed out, were able to build up a shock absorber of savings during lockdown to cope with rising prices.

However, families of lesser means were getting dragged down by debt, especially if they endured the 20 per cent wage haircut through being furloughed.

“A third of low-income households (3.8m) are already behind on their bills, and 4.4m households took out new or increased borrowing during the pandemic,” Schmuecker said, arguing for the strengthening of the UK’s social security system so that it at least provides enough for people to meet their basic needs and live with dignity.

The moral case for doing that would be compelling even if the cost pressures I cited above weren’t at least partly down to government policy.

But they are. Brexit, and Boris Johnson’s dismal deal, is contributing to them in multiple ways. The impact of energy costs on businesses, and its inflationary pressure, has also been almost completely ignored by ministers. I could go on.

Having helped fire up food price inflation, ministers have a clear responsibility to mitigate its impact on the poorest.

Sadly, there is scant sign of their living up to it. We look like we’re in for more fingers in more ears and more ageing, off-key songs.