Food in crisis: is Brexit putting us on the Breadline?

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Frozen working-age benefits, slow wage growth and rising inflation thanks to Brexit mean that an average household income in Britain will keep stagnating each year.

Although many of the low-income families in crisis are working households, in reality, their wages are far too low to support their survival. Oxfam has found that food prices have surged by 30.5% in the past 5 years – double the rate of inflation and 2.5 times the rate of growth the National Minimum Wage.

Kantar reported that the 1.4% increase year on year in food inflation will continue to rise, as will the price of simple everyday needs such as butter and tea. As food prices are hiking and wages remain at a stand-still, and with a severely dented spending power, consumers are largely being left with limited choices and are forced to rely on local foodbanks for their weekly groceries and meals. The Trussell Trust – the largest provider of foodbanks in the UK – has recently estimated that half of a million people are at present relying on food aid.

onefourzero’s research shows there has been an 123.5% increase from June 16 (Brexit vote) – June 17 in consumer search for Foodbanks, indicating a growing appetite for consumers relying on foodbanks as opposed to local supermarkets for their groceries.

Since the vote to leave the European Union, supermarkets have been exposed to many cost pressures which are causing a decline in sales. Sainsbury’s Chief Executive, Mike Coupe, stated that the effects of heightened costs have been rolled over to customers. Consumer spending fell by 0.8% in September, sending the UK on a slow growth period in the build-up to Christmas. Kantar also reported that online sales growth has shrunk to 6.7% from 21.9% in October 2014.

Money broker and World First’s Chief Economist Jeremy Cook stated that UK supermarkets such as Sainsbury’s have been left to answer some uncomfortable questions regarding where UK growth will surface from in the last quarter of the year.

The ONS report outlined that the upwards weight on inflation last month was caused by vegetables rising 5.7% on an annual basis, driving more consumers to depend on food banks just ahead of Christmas. Despite the pressures, supermarkets have been hugely active in stepping up support for food poverty charities and committing to zero operational waste being sent to landfill.

Tesco, in particular, has managed to sail through the adversity currently being experienced by the UK’s retail sector. They have been voted Britain’s favourite supermarket for the third consecutive year and group sales are up 3.3% to £25.2bn.

Chief Executive David Lewis has revealed that the increase in Tesco sales and profits is due to their competitive offers and the lowest level of food price inflation for customers amongst competitors; c.1% lower than rest of market.

The rise in food prices is a huge concern for UK’s consumers, forcing them to look elsewhere and consider cheaper options. It is obvious that supermarkets have to increase grocery prices to absorb higher import costs; however, in order to retain consumers and ensure local customers have access to food and groceries that they can afford, there is an urgent need for retailers to work closely with suppliers to keep prices low.

For supermarkets to retain consumer confidence, it is massively important to avoid passing on the full effect of price rises to consumers. Supermarkets – such as Tesco – are hinging on the ability to balance raised sourcing costs while remaining competitive on price. Not only is this essential in retaining a trusted consumer base, but also shows the sector taking responsibility to help the communities that still continue to shop at their local supermarkets.


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