FOOD PRICE INFLATION

Rising food bills have driven Britain's inflation rate to the highest in the Western World. The UK's Consumer Price Index (CPI) figure of 3.7% is two or three time higher than similar economies across Europe and beyond. New figures from the Organisation for Economic Co-operation and Development (OECD) suggest British families are suffering far more than counterparts across the globe. The 3.7% figure compares to just 1% in Germany, 1.1% in the Netherlands, 1.5% in Italy and Spain, 1.7% in France and 1.8% in Belgium. The figure has actually fallen by 2.1% in the past year in Ireland and by 1.2% in Japan.

Britain's higher inflation comes at the same time as millions of workers have suffered a freeze or even a cut in working hours and pay. While the latest figures show an increase in unemployment. The net effect is a bigger squeeze on living standards than most other countries surveyed by the OECD with warning of public sector job cuts and tax rises to come. Only countries like Greece, Turkey, Hungary and Mexico are doing worse in terms of general inflation. Families, pensioners and others see most evidence of the UK's inflation in terms of higher food bills.

The high cost of petrol has eased slightly in recent weeks. The food inflation rate in this country is put at 2.8%. This compares to 1.2% in Germany, 0.8% in France and 0.7% in Belgium. In fact food in many nations is actually cheaper than it was a year ago. The fall in Ireland is 7.1%, while it is won 1% in he Netherlands, 1.9% in Spain and 0.2% in Italy. There has been no change in the USA. One reason for the increase is the fact that British supermarkets impose large quantities of food from overseas. The fall in the value of the pound has made these imports more expensive.

However, even home grown produce is considerably more expensive than a year ago, according to separate research by MySupermarket.co.uk. Its figures for May, picked up a 20% increase on both cauliflowers and cucumbers. There was a 26% rise on a pack of mixed peppers. Bread, eggs and butter are also up by more than 3% in the past year. The nation's supermarkets insist that they are helping shoppers survive the recession with a mix of price cuts and other promotions. However, this appears to be at odds with the fact the 'big four', Tesco, Asda, Sainsbury's and Morrisons, continue to post record profits.

Asda recently announced plans to buy up the budget chain Netto, which claims to offer cheaper prices than the big four, in a deal worth £778million. In April, Tesco announced record profits for last year of £3.4billion, which equates to around £6,500 a minute or £107 a second. The British Retail Consortium denied shoppes get a raw deal. Its food director, Andrew Opie, said: 'UK food prices are consistently lower than other EU countries. The inflation rate doesn’t tell you about actual prices.

He said, "Our latest analysis shows despite commodity prices, such as oil and cocoa, going up, food inflation in the UK is a quarter of what was this time last year. The value of the pound against the dollar and euro is important in determining food prices. Sterling has recently been weak against these two currencies, which has had an adverse impact on food inflation in the UK." (Source: Daily Mail, Jun/10)

Families buying in bulk at supermarkets to save money could be making a huge mistake. An investigation reveals customers are often worse off going for "big value" packs from beer, milk and crisps to washing powder and toilet paper. And they'd save money on a raft of everyday goods by buying smaller sizes instead of believing bigger means a better bargain. A retail expert who analysed the probe by MySupermarket.co.uk at Asda, Tesco, Sainsbury's, Morrison's and Ocado, the Waitrose online partner, said, "We must conclude this is something stores do on purpose."

At Sainsbury's Carling lager is 12p per can dearer in a 15-pack compared to a four-pack. Whole milk at Asda costs 2p per pint more in a six pints pack than a four. Tesco sweetcorn will cost you a tenth more per can in bulk. Crisps, cereals and washing powder were also dearer per unit in big packs. At Ocado HP Sauce was 46% dearer in a bigger pack. Morrison's soft spread butter was a fifth cheaper in a small pack.

Kiti Soininen of market researchers Mintel, said, "Supermarkets should take responsibility for encouraging us to believe bigger packs are better value." Sainsbury's and Asda later admitted mistakes had been made on some big value packs and promised to amend prices. Tesco and Morrison's pointed out that they display unit prices on shelves so customers can make comparisons. A Tesco spokesman said, "We work hard to keep prices down for our customers." (Source: News of the World, Feb/10)

Food price inflation in Britain is running almost four times higher than the rest of Europe as the biggest supermarkets have enjoyed a profits bonanza. New figures from the OECD put the annual figure in Britain at 8.6% in the year to April, compared to an average of 2.2 % for the EU. The increase in the cost of putting food on the table looks even more alarming when comparing the UK to similar economies like Germany, France and the US.

In the year when UK consumers were hit by the 8.6% increase, food shoppers in Germany saw a fall of 0.7%, while the figure in France rose just 0.8%. The increase in America was just 2.3%, while the figure was 1.9% in Belgium. Among countries showing a fall in the cost of food were Ireland at -1.7%, Portugal at -1.3% and Spain at -0.1%. The big increases in the cost of food essentials have hurt British consumers by adding hundreds of pounds to annual household bills.

By contrast, the profits at the big four supermarkets, Tesco, Sainsbury's, Asda and Morrisons, have rocketed. A fall in the value of the pound against the Euro and other currencies has artificially inflated the price of importing food from Europe and beyond. However, this does not explain the full scale of the disparity in food price rises between Britain and most of the Western world. Recent industry figures make clear the stores have failed to pass on huge falls in the wholesale price of rice and potatoes.

A number of farming organisations have argued that producers have only received a fraction of the price rise inflicted by stores on customers. Big stores are taking a much bigger slice of the purchase price of cheese than a year ago. There have been similar complaints on free-range eggs. Sainsbury's recently announced that its profits rose by a higher than expected 11.3 per cent last year to hit £543million.

As a result, chief executive Justin King is in line for a pay, perks and bonus approaching £6million. Tesco profits rose to a record £3.13billion at the same time, a rise of 10%, confirming its position as Britain's biggest and richest retailer. Profits at Morrisons rose £43million (7%) to £635million. Asda, whose profit figures are buried in the accounts of its U.S. owner, Wal-Mart, has reportedly done even better than most of its rivals.

The OECD figures, which cover 30 major economies, also suggest Britons have not benefited from the fall in wholesale energy prices. The data shows an annual increase of 0.4% in the year to April, which compares to a fall of 5.6% for the EU. Energy prices in Germany showed a fall of 5.2%, while the figure came down 13.2% in France and a staggering 25.2% in the USA.

The Lib-Dem shadow Treasury spokesman, Dr Vince Cable, has made clear that supermarkets should not be creaming off extra profit at the expense of shoppers. He said, "There is clear evidence that food and commodity prices are falling around the world. These should be passed on by retailers. There really is no excuse for supermarkets to take advantage of the situation to fatten up their profit margins." (Source: Daily Mail, May/09)

Next >>>