British MPs launch investigation into soaring food price inflation

Supermarket bosses claim food prices, which are at 48-year highs, have now peaked

The prices of some products are now starting to edge lower but the reductions will provide only the slightest relief to UK household budgets. EPA

British politicians have launched a probe into food supply chains in the UK, as households face rates of inflation not recorded since the 1970s.

The cross-party Environment, Food and Rural Affairs Committee of the House of Commons said it would look at how profits are made at each point from the farm gate to the dining table, a supply chain often called “farm to fork”.

The committee will also take into account the effects of regulations, imported food and global commodity prices.

“When many people are struggling to give their families good food at a reasonable price, it's our job as a committee to get to the bottom of what’s going on,” said Robert Goodwill, chairman of the committee and a Conservative MP.

“We know that consumers are paying higher prices, but the question is — are the other parts of the supply chain unduly benefitting from that, or are some of them also feeling the squeeze?”

1970s food inflation levels

Figures from the Office for National Statistics (ONS) showed that food prices in the UK were 19.1 per cent higher in March than a year earlier, the biggest such rise since August 1977.

According to the British Retail Consortium (BRC), fresh food inflation accelerated by 17.8 per cent in April, up from 17 per cent in March.

Meanwhile, the Bank of England raised interest rates by 0.25 per cent on Thursday to 4.5 per cent. It was the 12th consecutive time that the Bank of England has increased rates in its battle against stubbornly high inflation.

The opposition Liberal Democrat Party has called for an investigation into the major supermarkets by the UK's Competition and Markets Authority.

The Times newspaper reported that in a video call with government officials, including John Glen, chief secretary to the Treasury, that supermarket bosses insisted food prices had peaked and would soon start to come down.

According to the ONS, the price of a pint of milk has increased by 40 per cent to 70p over the past year and the price of a 250g pack of butter by 29 per cent to £2.36.

Economists believe the “stickiness” of high food inflation is what is keeping overall inflation in the UK economy in double digits.

Prices of some products, like milk and butter, are now starting to edge lower but the reductions will provide only the slightest relief to battered household budgets.

Supply chains

Supermarkets say they've been using some of their profits to keep prices as low as they can for as long as they can, but they would like some government help to reducing the costs of packaging and environmental regulations.

Supermarkets also refute claims that they are profiteering, pointing to their relatively thin operating margins, which average at around 4 per cent.

They are quick to point out that further down the supply chain, major consumer goods companies such as Unilever and Nestle can have margins of about 16 per cent.

Prime Minister Rishi Sunak is also hosting a food summit with industry leaders at Number 10 Downing Street next week.

It is thought issues related to food prices and supply chains will be discussed at the event, which will be attended by the Food and Drink Federation, the British Retail Consortium (which represents the UK's supermarkets) and the Farmers' Union.

It is predicted that Jeremy Clarkson, the former Top Gear presenter and now star of Clarkson's Farm on Amazon Prime, will highlight the plight of UK farmers at the summit.