UK Trade Organization: Due to the Middle East conflict, UK food inflation could triple by the end of the year

A UK food and beverage industry organization said that, due to spillover effects from the conflict in the Middle East, UK food inflation could rise to as much as three times its current level by the end of the year.

The British Food and Beverage Federation expects that by the end of this year, UK food inflation will reach 9% to 10%. The federation said it had previously predicted that inflation would ease this year, with the year-end figure at around 3.2%.

Representing thousands of food and non-alcoholic beverage businesses, the federation said its sector is particularly vulnerable to disruptions to supply through the Strait of Hormuz and to energy costs.

The federation said large and medium-sized producers, as contracts are due for renewal, are preparing to deal with rising energy prices; while small producers buying on the spot market have already felt the pressure.

UK exporters to the Middle East have had to pause or cancel shipments to the region, leading to sales losses and further intensifying uncertainty.

In a statement, the federation’s chief economist said: “The current situation is unprecedented and difficult to predict. But given the magnitude and pace of cost increases, even though businesses have done everything they can not to pass on higher prices, food inflation will clearly continue to rise in the coming months.”

The organization said its forecasts for food and non-alcoholic beverage inflation are based on the following assumptions: that the Strait of Hormuz will reopen to normal traffic within the next few weeks, and that energy production in the region will return to normal within a year.

Data from the British Retail Consortium showed that in March, food and non-alcoholic beverage inflation year-on-year fell to 3.4%, from 3.5% in February.

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Editor: He Yun