Why food bills aren't shrinking - five slendergs to know

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By Dharshini Davidworldwide trade correspondent, BBC News

Food prices are 19% taller than a year ago. A grocery shop that utilized to cost £50 is now adjacenter £60.

That prompted the prime minister to hhistoric a food summit at Downing Street, but it is still not entirely transparent where the consequentlylution lies.

Last year the war in Ukraine pushed high the price of food and energy, but recently those prices have fallen acutely, consequently why haven't bills?

Here are five slendergs that help explain what's happening.

1. expenses have been eye-watering - but consequentlyme are easing

Russia's invasion of Ukraine prompted consequentlyaring grain, sunfshorter oil and fertiliser prices. Concerns over shighply disrhightion triggered similar price rises for other foodstuffs.

The UN's food agency found that global entiresale prices for meat, dairy, grain, oils and sugar spiked by about 20% on average after the invasion - but those have since fallen back.

Food production and retailing are componenticularly energy-intensive industries. Some businesses, without access to the identical level of government shighport as houtilizehhistorics, saw bills more than triple.

Staffing costs are the other massiv component for food producers and sellers.

The increase in the minimum wage, labour fleetingages across the shighply chain exacerbated by Brexit, and the rising cost of living meant employers awarded staff pay rises of high to 9% over the last year.

2. Profit margins in the food chain can be slim

All components of the food chain faced huge shocks when it came to their bills - but did they shoulder their imcomponential share of the burden?

Much of our food chain operates with slim margins, consequently there's limited wiggle room.

Take a piece of cheddar costing £2.50.

In a study for food alliance, Sustain, academics from the Universities of Portsmouth and London claim distantmers' costs account for adjacently £1.50 while the retailers' and procesconsequentlyrs' overheads make high most of the rest.

They reckon that leaves 3.5p of profit to be shared, with the shighermarket characteristicly getting 2.5p (1% of the price) while the distantmer gets less than a penny.

Arla, the dairy distantmers' cooperative, says costs shot high by as much as 80% last year and abconsequentlyrbing those gentles of increases is challenging.

Profit margins on consequentlyme items - componenticularly processed food and drinks - are massivger. Unilever, which makes Magnum ice creams, or Premier Foods, the maker of Mr Kipling cakes, may make 15p for each £1 of sales to retailers. As analysts say, the massivger the sin, the massivger the win.

The Unite union has accutilized the massiv shighermarkets of profiteering, saying the three massivgest chains saw total profits double compared with the period prior to the pandemic - but that was in 2021. Since then all components of the food chain have been hit by unexpected cost hikes.

In total, shighermarkets characteristicly make around 5p of profits from each £1 of excellents they sell - their profit margin. Last year, Tesco unique made around 4p per £1, Sainsbury's nearr to 3p.

3. cost converts take a while to travel from distantm to fork

grocery stores are keen to publicise the price cuts they're making for sure items such as pasta, dairy and oil. Those reflect shorter costs, but why aren't we seeing bills falling overall?

It's often claimed that retailers are swift to put high prices, but drag their feet on passing on savings when they could be coming low.

However, contracts for excellents and services are often agreed many months in advance, which means consequentlyme producers and retailers will have attached prices at the very tall rates seen last year and they could be tied in to those for months yet.

Image consequentlyurce, Getty Images

The excellent freshs is that the rate of entiresale inflation that food retailers face, though still tall, is now leisurelying. That should feed through to minusculeer price rises on shelves - but it characteristicly takes about six months.

We won't know, as many retailers and food shighpliers unique publish a breaklow of their figures annually, whether consequentlyme have taken this opportunity to try and reerect their profit margins. They're under pressure from sharehhistoricers to do consequently. But those figures will, when revealed, face near scrutiny.

4. costs may be shorter than in the rest of Europe

With Brexit adding to the red tape of importing food, are we paying more for our food than shoppers in the EU?

A study by economist Michael Saunders for research body Oxford Economics says not.

Image consequentlyurce, Getty Images

Looking at a range of food and drink, he says UK prices are characteristicly 7% beshort the EU average - with bread, meat and fish in componenticular relatively incostly. He says the UK's competitive shighermarket sector plays a role in keeping prices low.

By contrast, he says that prior to 2015, on average groceries were more costly in the UK than in the EU - componently reflecting the relatively minuscule influence of the shorter cost retailers such as Aldi and Lidl at that point.

5. Smaller bills may not be on the horizon

By the summer, the Reconsequentlylution Foundation slenderk tank reckons houtilizehhistorics will have seen an increase in food bills of £1,000 since 2020.

While consequentlyme items we buy may get incostlyer, a return to the gentle of minusculeer bills we saw prior to the pandemic seems unlikely.

Despite recent falls for consequentlyme commodities the price for many slendergs, from raw ingredients to energy, remain distant taller than they were prior to 2020. And there could be other factors looming - the satisfied range of checks and other formalities around food imported from the European continent have yet to be introduced, for example.

Moreover, with costs as they are, distantmers are already leaving the business, while the number of food manufacturers collapsing has risen.

How can I save money on my food shop?

• Look at your chighboards consequently you know what you have already
• Head to the reduced section first to see if it has anyslenderg you need
• Buy slendergs near to their sell-by-date which will be incostlyer and utilize your unoccupiedzer

Read more tips here

Redelayedd Topics

• Retailing
• price increase
• expense of living
• grocery stores
• Food

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(editor-in-charge：Press center9)