As the United Kingdom gears up for its next general election, the escalating cost of living, particularly soaring food prices, has emerged as a pivotal issue for voters.
Household budgets have been under significant strain due to high inflation driven by the aftermath of the COVID-19 pandemic and the ongoing conflict in Ukraine.
Although inflation has recently aligned with the central bank’s 2 percent target after experiencing double-digit peaks in 2022 and 2023, the cost of essential items, including food, remains substantially higher than in previous years.
Public dissatisfaction with living standards is mounting, and voters are expected to oust the incumbent Conservative Party, potentially paving the way for the Labour Party’s return to power for the first time since 2010.
How Much More Expensive is Food?
Despite the Bank of England’s efforts to curb price increases by raising interest rates, the accumulated price growth over recent years has not been reversed. Prices continue to rise, albeit at a slower pace.
Data from the Office for National Statistics (ONS) reveals that food prices have surged by approximately 31 percent over the past three years. Certain staples have seen even steeper increases. For instance, the average price of a pint of milk has climbed by 23 pence ($0.29), or 55 percent. The cost of a kilogram of sugar has jumped by 45 pence ($0.57), or 63 percent, while a whole chicken now costs an additional 1 pound and 7 pence ($1.36), marking a 40 percent increase.
The financial burden on households has been exacerbated by years of sluggish economic growth. Gross domestic product (GDP) per capita grew by a mere 4.3 percent from 2007 to 2023, compared to a robust 46 percent growth over the preceding 16 years, according to the Resolution Foundation think tank.
Amid this backdrop of tepid economic expansion, wages have failed to keep up with inflation. Average weekly earnings in Great Britain rose from 581 pounds ($800) to 687 pounds ($871) between May 2021 and April this year, an 18 percent increase, according to the ONS.
Is the UK’s Experience Unique?
Many countries experienced high inflation due to the twin pressures of the pandemic and the war in Ukraine, primarily because of soaring oil and gas prices. However, the UK faced a more severe impact compared to most developed economies.
The UK’s consumer price index peaked at 11.1 percent in October 2022, the highest in 41 years. Inflation for food and non-alcoholic beverages reached an even higher peak of 19.2 percent. In comparison, overall inflation peaked at 9.1 percent in the United States, 8.7 percent in Germany, 8.1 percent in Canada, and 6.9 percent in France.
Economists have attributed the UK’s particularly high inflation to several factors, including a greater reliance on imported food, heavy dependence on gas, and labor shortages resulting from the pandemic.
What’s Next?
There is some good news for UK consumers. Inflation has stabilized, and wages have been rising faster than prices since mid-2023. In April, annual growth in regular earnings reached 6 percent, or 2.3 percent when adjusted for inflation.
Moreover, there are indications that retail prices are easing more rapidly than the latest official inflation figures suggest. The British Retail Consortium (BRC) reported that prices in stores and supermarkets fell by 0.2 percent in June compared to the previous month. Food inflation also slowed, from 3.2 percent to 2.5 percent, according to the trade body.
“Whoever wins Thursday’s election will benefit from the efforts of retailers to reduce their costs and prices, alleviating the cost of living for millions of households,” said BRC chief executive Helen Dickinson. “The recent years should serve as a cautionary tale that significant increases in business costs inevitably lead to higher consumer prices.”
As voters head to the polls, the rising cost of living remains a critical issue, influencing their decisions and shaping the future political landscape of the United Kingdom.
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