Why is food so expensive? Andy Newman explains the reasons

Among these are the fact that it’s nigh on impossible to get a GP appointment when you are ill, the chronic under-funding of our schools, the lack of affordable decent housing, and the dire state of our public services.

Perhaps the issue which has the greatest impact is the one we all confront when we go to the supermarket: the runaway cost of feeding ourselves. 

The UK’s headline rate of inflation remains stubbornly in double digits, but the rate of price increases for food is much worse than this: grocery inflation has hit 19.2%.  Small wonder that even many in full-time employment are having to turn to food banks to put meals on the table for their families.

There are a number of factors behind this. Some of these are out of our control, but not all of them. So what can we do to make food affordable again?

Certainly external issues, in particular post-pandemic global food cost rises and the impact of the war in Ukraine on both energy and feed and fertiliser costs, have put upwards pressure on prices. 

But if they were the only reasons, then food inflation would be just as high everywhere.  But the simple fact is that it isn’t; the UK is an outlier.

The average rate of food inflation in Europe is 11.9% – certainly high, but nowhere near our domestic rate of nearly 20%.  So why are we suffering so much more than our nearest neighbours?

One big issue is supply. At the same time as deliberately starving our food production sector of labour (thus forcing up prices), we have unilaterally decided to make it much more difficult to import food to make up the difference. 

The results have been plain for everyone to see in empty supermarket shelves. 

The same level of demand chasing fewer groceries can only have one outcome: rising prices.

And while adverse weather events such as the drought affecting growing conditions in southern Europe have been behind some of these shortages, they have been exacerbated by our own producers not being able to heat the glasshouses need to fill the gap, and the unwillingness of European lorry drivers to come and sit in long queues on the M20 when they can more easily deliver their goods to eager buyers in the EU.

On top of all of this, much has been written about ‘greedflation’, with accusations that retailers have been cashing in on rising prices to boost profits at the expense of us all.

Now, I am always happy to have a go at supermarkets when they exploit their powerful positions to damage the interest of consumers (and, more often, farmers), but on this occasion, the evidence is in their favour. 

It’s true that the big players such as Tesco and Sainsbury’s make large profits, but mainly because of their sheer size;  their margins are actually pretty small, and getting thinner.  Tesco may have made £1 billion profit in its most recent financial year, but on a turnover of £66 billion that is a margin of just 3.8% – not many businesses could survive on such a slim profit ratio.

Similarly, Sainsbury’s has seen its profit margin slip from 3.4% to 2.99%, as a result of what is describes as ‘investment in prices’.  So on this occasion, it is probably unfair to blame the big supermarkets for profiteering.

So what is to be done?  Yesterday saw a ‘food chain summit’ at 10 Downing Street, at which farmers, producers and retailers were called in to discuss how to tackle Britain’s continuing inability to provide affordable food for a growing chunk of its population.

The truth is that here are no quick fixes. While we could – and should – immediately open up the visa process to ensure that at the very least crops get harvested and are not left to rot in the ground, we need to completely redesign the entire food supply chain so that, for example, farmers receive a fair price for the food they produce, and can access the workforce they need to do so.

In the meantime, some short-term action is required to ensure people can afford to eat, and that will have to come from government. 

If it was possible to deliver targeted energy subsidies so that people didn’t freeze over the winter, then why can’t we offer similar targeted help for those who can’t afford to put food on the table – at least until grocery inflation starts falling, as it is predicted to do later in the year.

If a government can’t even ensure its population is adequately fed, then what exactly is it for?