Severe pressure on consumers continues, but a price slowdown is imminent

4 January 2023 — Food inflation is one of the most important topics heading into 2023, highlighted by the latest UK data. Annual growth in UK food prices reached 13.3% in December, the highest he has since 2005 when records began. This prompted predictions of another difficult year to come, but at the same time, other parts of the world are showing signs of lower food prices and could start to fall. This leads to another prediction.

It’s too early to say with certainty how food inflation will play out in 2023, but there are mixed opinions from global economists. We may see some easing by spring, but energy and fertilizer prices, the impact of weather on commodity and crop yields, the ongoing war in Ukraine and other changing market dynamics could all turn around. There is likely to be.

But Helen Dickinson, CEO of the UK Retail Consortium, said 2023 “will be another difficult year for consumers and businesses as inflation shows no signs of abating any time soon”. I’m here.

UK retailers may be forced to raise prices further to offset higher energy prices, which could rise again when the government’s corporate energy bill support scheme ends in April. I have. Without the scheme, retailers’ energy bills could rise by £7.5 billion (US$9 billion), Dickinson warned.

“It has been a difficult Christmas for many families across the UK. Not only has the cold weather forced people to spend more on energy bills, but the aftermath of the war in Ukraine has increased the need for animal feed, fertilizer and energy. As we continued to keep costs high, the prices of many essential foods also increased,” she says.

UK food inflation, which reached 13.3% in December, is up from 12.4% in November.UK food inflation, which reached 13.3% in December, is up from 12.4% in November. This is above the three-month average of 12.5%.

Fresh food inflation accelerated significantly to 15% in December from 14.3% in November. This is above the three-month average of 14.2% and the highest fresh food sector inflation on record.

Meanwhile, shelf food inflation accelerated from 10% in November to 11% in December, according to the BRC.

Has Food Inflation Peaked?
While global food prices appear to be falling in some countries, preliminary inflation data for December from the German Statistical Office shows that food inflation in the country peaked at 21.1% in November. , slowed to 20.7% last month.

“Despite recent declines, business price expectations remain high, suggesting that the pass-through of higher production costs is far from over. Strong price negotiations are likely to keep food price inflation high,” emphasized Carsten Brzeski, global macro head at ING Research.

Francois Sonneville, director of beverages at RaboResearch, said: Ingredients first its consumers and businesses Must be prepared for years of price volatility And as the world moves into an era of heightened volatility, unexpected market turmoil occurs.

In the United States, the Department of Agriculture (USDA) highlighted that food inflation is projected to stabilize between 9.5% and 10.5% by the end of 2022. in the country.

“Food prices are expected to rise more slowly in 2023 than in 2022, but are still above historical averages,” the USDA stressed.

Government agencies expect food prices to rise between 3.5% and 4.5% this year, while food prices at home will rise between 3% and 4%, and food prices outside the home will rise between 4% and 5%. We expect it to rise in between.

Asian inflation
Meanwhile, Chinese consumers will see lower prices in stores, as China has effectively curbed inflation, dropping from 8.8% in December to 3.7% in November last year, according to official data. prize.Japan and Egypt, which rely heavily on food imports, have suffered mainly due to their currencies losing value against the US dollar.

china is Abandon Zero COVID Policy Halting frozen food health testing could ease import restrictions and lower inflation in the coming months.

As Japan’s statistics bureau announced in December, Japan is lagging behind other countries. That’s because Japan’s consumer price index has hit a 40-year high of her 3.7%. October.

The country, which is heavily dependent on food imports, is suffering mainly because its currency is losing value against the US dollar.

USD too strong
Egypt has been forced to seek a US$3 billion loan from the IMF and has even more trouble maintaining the value of its currency against the dollar. In addition, according to the USDA, Egypt imports most of its grain from Ukraine and Russia, and 82% of its wheat was imported from two countries before the war, so other markets were used to buy goods. I had to turn my attention to

The African country depends on the US dollar for the supply of wheat it has to get at inflated prices because of the war in Ukraine. Moved in the last few months to increase productionmaking wheat cultivation a matter of national security.

Egypt’s annual national spending on wheat imports in 2022 was expected to double its spending in 2021 to US$5.7 billion, according to a March Food Policy Institute study.

Gaynor Selby and Mark Cervera

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