Food prices won’t change much in the coming years – but food quality will

Global warming will continue to put pressure on supplies for the foreseeable future - which could continue to drive a surge in inflation

Food prices in the UK seem to be easing off at last, with the Office for National Statistics recording that bread and cakes were among the items that were down month-on-month. But they are still up 9.2 per cent from a year ago and have been one of the main drivers of the recent surge in inflation more generally. Indeed, they are 27 per cent up on the level of two years ago, so this festive season is going to be a massively expensive one for most families.

Why prices are rising

But what’s next? There are some special reasons why food has become much more expensive over the past two years. These include the war in Ukraine, which hit global grain supplies – especially of wheat, higher fertiliser prices (though these have started to come back down) and extreme weather.

It is important to distinguish weather from climate change, but there is no doubt that bad weather has hit the production of several key products, including olive oil, rice and soya beans. Spain has had a gradual decline in rainfall and two hot, dry summers across the Mediterranean have pushed up olive oil prices to record levels. Rice has been affected by drought conditions right around the world, from Italy (which produces half of Europe’s crop), to India, to California. Soy production has been similarly hit by low rainfall, and since most soy is used as an animal feedstock, that pushes up meat prices right around the world.

Maybe the outlook will be more predictable and in any case, technology will help as we learn to cope better with extremes of weather. But I think we have to accept that global warming will continue to put pressure on the world’s food supplies for the foreseeable future.

Future costs

So, will prices go up, down, or sideways? We know that it matters a lot for the UK, as we import nearly half our food, 46 per cent of it last year. There are some things we have to import for obvious reasons. It is hard to see a boom in domestic bananas or pineapples. But there are also some basic vegetables that we import a lot of, such as tomatoes and onions, that could grow more in Britain. The Netherlands, with a similar climate, is second only to Mexico as the world’s largest exporter of tomatoes. But realistically, food prices in the UK will be determined by what happens in the world. It’s as simple as that.

My guess, and it has to be a guess, is that food prices will remain pretty much the same in relative terms as they are now – relative, that is, to the price of everything else – and in the developed world we will continue to spend between 10 per cent and 20 per cent of our income on food. But the radical change will be in the quality of what we eat. We will have a more healthy diet.

Global food budgets

As a general rule, as countries get richer they have tended to spend a smaller proportion of their income on food. In the UK it was on average below 9 per cent before the recent increases and is now around 11 per cent. In Ireland, it was lower still, just over 8 per cent. In somewhat poorer European countries, such as Poland, it was 20 per cent. By contrast, in the emerging world, food is a much larger element of the household budget, accounting for 29 per cent in India and more than 50 per cent in Nigeria.

These are averages, and poorer households spend proportionately more on food than richer ones. In the UK the bottom 20 per cent of households spend between 14 per cent and 17 per cent on food and non-alcoholic drinks, and inevitably for some families, the proportion will be higher still. You have to be careful with averages. The fact that the proportion of income the average Briton spends on food is among the lowest in the world does not mean that everyone can afford to eat well.

Looking ahead, I cannot see the share of food in the household budget falling much further. Some trends will pull our food costs down. The most important of these is the amount of meat Britons eat. That has fallen overall by about 20 per cent between 2009 and 2019, with a switch from beef and lamb to chicken. Meat is relatively expensive, so if we continue to reduce the amount of it we eat, that will cut overall food costs. However, there is a shadow. One of the reasons why meat consumption has gone down is the rise of ready meals. If you send out for food it is likely to have less meat than if you cook at home, and that gives rise to another concern. We are eating more ultra-processed food which is bad for our health – everything from snacks to any product with added sugar or salt. This is a particular concern in the US, but also in the UK where nearly half our calories come from these foods.

Given the widespread concern about public health, it is easy to see how the political mood will shift in the years ahead. The food giants will be encouraged, maybe forced, to produce healthier meals. It will be like smoking: gradually, we will change our habits to eat better. We will still have our festive season – we are human beings after all – but maybe one that is a bit kinder to the planet, and indeed to ourselves.

Need to know

I am always fascinated by societal change: what drives us to behave in different ways in our day-to-day lives. Sometimes it is technology. The fact that you are reading these words online rather in print is a radical shift from the days when I started as a journalist and had to write on a manual typewriter. (Typewriter? Not many young people would know what that was.)

Sometimes it takes some sudden emergency to move how people do things. The pandemic radically increased the amount of goods we buy online, increasing it from 20 per cent in early 2020 to a peak of 38 per cent in January 2021, but had fallen back to 26 per cent last October. Will working from home follow a similar pattern? Probably yes. Indeed, I think we will get closer than people think to the old routine of going into the office most of the time, but of course, I acknowledge that may be wrong.

But what about food? There are some long-term trends that I have noted above, particularly the fall in red meat consumption and the rise of meals either ready-cooked that you buy in the supermarket, or the ones that are delivered to your home. It is fairly easy to predict a further shading down in the amount of meat we eat, for that is just extrapolating a clear existing trend. It is much harder to call a turning point. I am fairly sure that the mood will shift against ultra-processed food, but I don’t have much evidence for it yet.

Improving health

It is pretty clear that public policy is shifting. Governments are under financial and moral pressure to improve public health, and ultra-processed food is an easy target. It also has the advantage, from a government’s point of view, of being something that can be tackled by legislation. They don’t need to change voters’ habits, always liable to be unpopular. They can simply go to the food manufacturers and get them to reformulate their products, as the UK government has done to cut down the amount of sugar in soft drinks.

The simplest way to cut down on ultra-processed food would be for more people to cook at home. But that is tough. It takes time and young people are under pressure. While Jamie Oliver has done sterling work to lift cooking (and eating!) standards in schools and elsewhere, I don’t yet see evidence of a real shift in habits. Maybe that will start in America, where the issue is widely discussed and is even more serious than in the UK.

Food poverty

A final point. We are lucky to have relatively cheap food – cheap by the standards of 50 years ago, if not five years ago. We are lucky to have the variety of food available in every supermarket. And we are lucky to have an extraordinarily wide range of ready-meals either to buy or have delivered. So let’s not dismiss all that. But let’s also remember that some people go to bed hungry, even in a developed country such as the UK. In focusing on healthy lifestyles we should not forget about those for whom getting enough to eat is a struggle. We need to find ways of keeping prices down too.

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