(qlmbusinessnews.com . Thu 21st Aug, 2025) London, UK —
Rising Cost of Living: How Weather and Wages are Pushing Food Prices Higher
The price of daily essentials ranging from instant coffee to beef and fruit juices has seen a relentless climb, with the latest figures indicating a 4.9% increase in food and non-alcoholic drink prices over the year to July. A broader view reveals an even more pronounced trend, with food prices surging approximately 37% in the past five years, a stark contrast to the mere 5% rise recorded in the preceding five years.
What's behind the persistent uptick in prices at grocery stores, restaurants, and cafes, and is there any relief on the horizon?
A major culprit behind these rising costs is the climate. The UK's drought has resulted in poor crop yields, while extreme weather events worldwide have escalated wholesale prices for commodities like coffee beans and cocoa.
“The weather is going to be driving costs up,” states Lewis Clare, an organic oats and pig farmer near Manchester. This year's particularly dry conditions have led to disappointing crop yields, with Clare lamenting, “I hate to say I think it's going to go up even more.”
Global occurrences, such as the war in Ukraine, have also disrupted supply chains, further inflating prices. Clare, who diversified his farm's production after the onset of the conflict, noted, “Whether it's some kind of extreme weather event or the war in Ukraine, farmers are the first to feel it… and then it trickles down to the consumer six to 18 months down the line.”
Furthermore, business owners are wrestling with increased costs due to the hike in the minimum wage and higher employer National Insurance Contributions since April.
Jane Matthews, of the Ice Cream Farm in Cheshire, highlights the multipronged pressure from rising expenses in payroll, food, and energy. Aware of their customers' financial constraints, her business has reluctantly passed these costs onto their patrons. “You've got to make these decisions now so you can keep going,” she commented, underscoring the survival stakes.
A report released on Tuesday indicates a shift in consumer behaviour, with many trading down from fast food and casual dining to more modest treats. Matthews has observed this trend firsthand, seeing guests complement their picnics with modest purchases from the farm.
For low-income families, the escalating cost of supermarket goods, especially staples, painfully underscores the deepening cost of living crisis. The disproportionate impact on these families is significant, as they allocate a larger share of their budget to food, according to the Resolution Foundation think tank.
Lalitha Try, an economist with the foundation, pointed out that while higher-income families might downgrade to own-brand products, those with lesser means have fewer alternatives for economising.
Danni Hewson, AJ Bell's head of financial analysis, noted that increased demand for high-protein meals has also driven up beef prices, affecting households across income brackets. “Most people live to their means… but inflation makes everything more expensive,” she said.
While food and drink inflation currently stands at 4.9%, the Bank of England forecasts a peak at about 5.5% by year-end, with hopes it will reduce to between 2% and 3% by 2026. As food price inflation significantly influences overall inflation, its trajectory is closely monitored for its implications on government policy and the Bank of England's interest rate decisions, especially with the autumn Budget and further rate decisions pending.
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