From milk to chips: why the price of staples is rising | inflation

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UK families are facing a cost-of-living crunch as prices for essentials rise and a drop in home-earned wages looms in the form of an increase in National Insurance.

Across the board, the latest official figures show food and beverage price inflation of 4.8% in December, although that masks larger rises in the cost of some necessities.

In part one of a series looking at the causes and effects of higher bills, we looked at why some staples in your supermarket basket now cost more than they did a year ago — and why there may be more pain in the future.

Noodle Image: JoKMedia / Getty Images

The cost of pasta has risen due to the high price of its main ingredient: durum wheat. About two-thirds of the world’s traded durum wheat comes from Canada, and the extreme temperatures and drought that hit the country last year have taken their toll on crops. Other countries also produced fewer crops than expected, leading to a supply scramble that pushed prices to a 13-year high.

A 500-gram bag of supermarket-brand noodles that used to cost about 55p in late 2020 is now typically 70p – up by more than a quarter. According to Italianfood.net, planting in Italy was delayed in the fall due to a drought followed by heavy rains, which could affect this year’s crop and mean prices remain high. Extremely cheap pennies can be a thing of the past.

Margarine Photo: Getty Images / Science Photo Library

The latest official inflation figures showed that the price of margarine and similar spreads rose more than 27% in the year to December. On shelves at Tesco, for example, a 1kg Stork tub has risen from £2.10 to £2.65 since last January. Meanwhile, official figures showed cooking oils rose 13%. It’s the oil in margarine that’s driving up prices: rapeseed oil and palm oil have hit record price hikes in recent months.

Again, bad weather in Canada and Europe, as well as Covid, can be partly to blame. Rapeseed crops have been hit by drought and high temperatures, while Malaysia, a major palm oil producer, has imposed restrictions on foreign workers and on the number of workers in the industry in a bid to slow the infection. Another factor is the rise in crude oil prices which boosted the demand for oil crops for biodiesel.

Milk photo: Nick Moore/Almy

At the farm level, there has been a 24% increase in the cost of milk production since January 2020, says John Allen, managing partner at Kite Consulting. “This is a massive rise, and the largest since 2007-2008 when we saw an increase in the prices of basic commodities.”

Perhaps the biggest factor was the cost of feeding the livestock, he says, which rose in part because of the cost of fertilizer which, in turn, rose because of gas prices. Farmers also faced rising labor costs and machinery prices. “The price to produce a liter of milk went from 28p in January 2020 to 35p this spring,” says Allen. Then processors face higher costs, with higher energy and labor prices. As a result, he says, consumers typically pay 7p to 10p for a liter of milk.

And it’s not over. Although only about 10% of milk is traded globally, the price affects what we pay for pints of locally produced milk. Efforts by governments in countries such as New Zealand and the Netherlands to reduce milk production for environmental reasons means supply is in decline. Demand is rising by 2% annually. This puts upward pressure on prices. “We have a growing demand and we have a steady supply,” Allen says. “We think this spring there will be more increases. It wouldn’t be unrealistic to expect increases of 20% – we are experiencing a huge dairy inflation.”

sausage photo: Getty Images / iStockphoto

The increase in the cost of processing and transporting meat is driving up supermarket shelves for sausage costs, says Sarah Baker, an economist with the Agriculture and Horticultural Development Council.

“Pork farmers don’t get good prices,” she says. “Processors pay more for labour, there are absences due to Covid, and then there is a rise in the cost of transportation, with a shortage of heavy truck drivers and higher fuel costs.”

Baker says that slaughterhouses have struggled to replace skilled workers in the EU who worked as butchers and packers but left the UK as a result of Brexit.

Beef prices have gone up due to some of the same issues, as well as due to demand. Throughout the pandemic, the demand for products like ground beef has remained high as people cook at home rather than eat out. “Main Engines [for inflation] These are the costs of inputs – feed and fertilizers – and labor and transportation. Then you have the EU aftershock – the loss of highly skilled workers. Then there is Covid.”

Coffee photo: LoudTrombone / Alamy

Caffeine in the morning will cost you more as the long-term issues of climate change combine with the short-term issues caused by the pandemic. The price of wholesale Arabica coffee, used in ground coffee, rose 70% last year, while Robusta, most commonly used in instant coffee, jumped 60%, according to analysts at Rabobank. It comes after one of the biggest producers, Brazil, suffered a combination of drought and the worst frost in more than two decades.

Coffee prices have also gone up due to global shipping problems. The cost of shipping a container rose 240% last year as concerns about delivery security pushed some buyers to stock up. Brands have tried to rein in these costs but they are now seeping off the shelves. Nearly 100 different coffee products have risen in price in supermarkets this month, according to Assosia data for The Grocer Trade Journal. The survey recorded that some packages of instant coffee increased by as much as a third in price. Others rose by a more modest 4% or 6%.

Potato chips image: Mark Jello/Getty Images

It’s a tough time for salty snack lovers as prices for some of the UK’s favorite brands have skyrocketed in the past year. The average price for Pringles, for example, is up 10.3%, Sensations is up 8.8%, and Quavers is up 8.5% in September of last year, according to The Grocer. Recently, the first weekly grocery basket survey for 2022 showed that six packs of potato chips and cherries rose 6% to £1.53.

Prices have been pushed up by a combination of factors, ranging from increases in oil prices and energy costs to shortages in HGV engines everywhere that have driven up the distribution price. The cost of potato production is also rising, with every aspect, from labor, transportation and fertilizer costs, by more than 10%. There were also specific problems associated with Britain’s exit from the European Union. There is still an outstanding problem regarding the seed potato trade, which affects the trade in export to Europe and import of European seed.

Toilet paper Photo: Getty Images

The higher costs of pulp, transportation, and energy are absorbed by buyers of toilet paper and diapers. In recent weeks, manufacturers have talked about the impact of rising input costs, and have talked about plans to pass them on to retailers and consumers.

Akroll, which makes toilet paper for stores like Tesco, Aldi and Morrisons, said this month it would have to raise its prices. Last week, CEO Gareth Jenkins, who provided the latest set of accounts, outlined the issues: “Tissue pricing has reached unprecedented levels, driven by escalating energy costs (up as much as 500% for some suppliers) and global ocean freight charges. ., along with increased transport costs in the UK, resulting from a shortage of heavy truck drivers.”

This week, Essity, which makes the Cushelle and Velvet brands, said it will raise prices again this year. Wood pulp prices have risen due to shipping delays as well as changes in consumer behavior that have boosted sales of paper products at home and demand for cardboard for packaging home deliveries.

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