The cost of living crisis in numbers

February 2024 marked the ninth consecutive month that food inflation fell in the UK. We are now seeing a drop from the high rates of inflation of March 2023 – the highest annual rate of inflation seen for over 45 years.
Additionally, UK food price inflation was the highest among G7 economies in March 2023, second only to Germany. In contrast to the recent decline in global food commodity prices, the ONS suggests this reflects the lags before price shocks filtered through the supply chain.

The problem: consumers are visiting restaurants less than ever before due to the higher cost of living across the UK. But restauranteurs are at a crossroads between increasing their prices to stay open but deterring customers, or keeping their loyal customers happy but struggling to source ingredients and pay the bills. Many establishments will no longer be economically viable if they maintain their current prices. For these businesses, it is not a matter of profiteering but instead a question of surviving.
Along with the largest supermarket chains, small and medium-sized businesses are calling for suppliers to reduce their prices to reflect the decreased rates of inflation. However, this has been met with little success as wholesalers are keen to maximize[1]  their profits.


Soaring prices since the pandemic

Prior to the COVID-19 pandemic, the Consumer Prices Index (CPI) inflation was, on average, below the Bank Of England’s 2% inflation target. In the eight years before the pandemic, prices increased by 14%. However, in the last two years, prices have increased by 18%. That said, not all food products have been impacted equally and some are recovering better than others. Inflation for milk, cheese and eggs is rising at a slower rate than in 2022 and the annual rate of inflation for these products stands at its lowest rate since October 2021 at 3.3%.
Local businesses have had to raise their prices to cover food inflation - by 7.7% in the year up until December 2023. However, this can have a detrimental impact, deterring customers who are already cutting back on their weekly shop. 
It appears we may be past the worst levels of inflation and subsequent disruption to businesses, but there remain significant obstacles to overcome.


Creative solutions to food price inflation

In order to retain customers and keep doors open amidst the cost of living crisis, some catering establishments have come up creative solutions:

  • A wholesaler in North Wales cut their prices by up to 50% at the end of 2023 to help Welsh hotels, restaurants and pubs combat soaring prices.
  • Many establishments are streamlining their menus to focus on the most profitable and popular dishes. This also helps to reduce labour and inventory costs, further easing the burden.
  • Some businesses are turning to more sustainable waste solutions to prevent losses on products nearing their expiry dates via platforms such as Too Good To Go. The app saw a 36% year-on-year growth in 2023 with more than 26,000 active business partners.
  • Nomad Foods found that storing frozen food at -15ºC doesn’t compromise food safety, nutrition, texture or quality but could save 10% in energy usage compared to the industry standard of -18ºC.