Food prices 'to rise 3% per year until 2022', GlobalData says

Annual spend per head on daily essentials and treats has increased £55 to £2,686 this year, according to research and consulting firm GlobalData.

And spend per head will jump £440 by 2022 to more than £3,000, its figures said.

The GlobalData report suggests the steepest inflationary pressures would be seen in the prices of alcohol, meat, fish, sugar and sweet products during the next five years and would impact volume growth within those categories.

Grocery retailers are grappling to keep shelf prices low for customers despite sourcing costs increasing in the wake of the Brexit vote.

“The fall in the value of the pound since the EU referendum, combined with poor harvests, has caused significant price rises in imported produce”

Tom Berry, GlobalData

The value of the pound against the euro and the dollar has plummeted since last summer’s shock referendum result, squeezing what were already thin margins.

Tesco, Sainsbury’s, Morrisons and Aldi have led the charge to keep prices down, but GlobalData said rises “will ultimately be unavoidable” in the coming years.

GlobalData retail analyst Tom Berry said: “The fall in the value of the pound since the EU referendum, combined with poor harvests, has caused significant price rises in imported produce, pressurising retailers to find supply side efficiencies, reduce margins or increase prices for consumers.”

Retailers are bidding to source more of their goods from Britain as they prepare for the UK to leave the EU.

Morrisons has led from the front with plans to recruit at least 200 new British suppliers by the end of 2017.

Berry warned that the rest of the big four have more work to do in order to minimise price inflation and protect themselves against the discounters.

He said: “Aldi and Lidl source 77% and 70% of their core product ranges from British suppliers, respectively, leaving them far better protected to cope against currency fluctuations compared to competitors such as Sainsbury’s, which sources 50% of its products domestically.

“The discounters will therefore be in a stronger position to minimise price inflation and undercut the big four, appealing to price sensitive consumers in search of greater value.”