Will food inflation remain high in 2024?

Posted: 29 January 2024 | | No comments yet

How does IGD think food inflation will fare in the year ahead? And how will implementation of the Border Target Operating Model impact the sector? Find out here…

food inflation

According to a market prediction made by the Institute of Grocery Distribution (IGD), 2024 may not be the year to wave goodbye to higher food prices, as it forecasts that food inflation is expected to average between 1.9 percent to 3.9 percent over the course of the next 11 months.

Previously, the research charity predicted that food price inflation would fall to eight percent in December 2023, an accurate estimate when in fact food and non-alcoholic beverage inflation dropped to exactly eight percent during this month according to the Officer for National Statistics (ONS).

While its latest forecast sits significantly lower for food prices in 2024, IGD has explained that it believes this year is “set to be a critical year for the food and consumer goods industry. Many businesses will look for margin recovery. However, this comes at a time when businesses are faced with numerous challenges.”

In addition to its food inflation prediction, IGD has shared that it believes UK economic growth is “expected to stall in the years ahead”, and the current geo-political situation “has the potential to disrupt global supply chains in 2024”.

What’s more, the research charity has shared its stance that this year’s general election “will dominate the political landscape, slowing policy progress for the food and consumer goods industry”.

Countdown to BTOM

New Food has recently reported on the updated implementation of the next phase of the Border Target Operating Model (BTOM), something the UK Government defines as a “new approach to security controls” that applies to all imports, including live animals, animal products, plants and plants products.

Effective from 31 January 2024, BTOM has raised mixed opinions in the food and beverage industry, particularly as the implementation of this model has been pushed back five times, and was originally meant to be effective from 2021.

Previously speaking to New Food, Shane Brennan, Executive of the Cold Chain Federation (CCF), said “These Brexit checks will fuel food price inflation whenever they are brought in and so the longer they are held off the better”.

Brexit’s roadblocks to “frictionless trade”

However, Rupert Ashby, Chief Executive of the British Frozen Food Federation (BFFF), said that while he believes “the underlying issue is that when we departed from the EU, the promise of frictionless trade with Europe was made, yet the current reality falls vastly short of that commitment and the continuous postponement of the regulations is causing our members unnecessary frustration and costs,” he still thinks the BTOM is a “a positive step towards stabilising post-Brexit trade relations”.

Sharing its stance on the matter, IGD has noted it is “not certain that all parties will be ready”, particularly as “the status of the UK’s key trading partners, especially SMEs, is very difficult to determine”.

Highlighting specific points of uncertainty, IGD has noted the ability of businesses to provide pre-notification of incoming shipments on the Short Straits and Irish Sea routes, as well as availability of vets to sign off Export Health Certificates for animals and animal products heading to the UK. What’s more, IGD has raised whether businesses will be willing to engage with the new system in order to trade with the UK as a concern.

With the BTOM being implemented on 31 January, New Food will be keeping its readers updated with insight from the sector in the coming weeks.