Experts warn of new year price increases

Food retail prices are likely to increase more in 2012 than they did this year, despite signs commodity prices have peaked, according to new research from Grant Thornton.

A survey in August and September of 2,700 food businesses around the world found 41% expected to increase prices over the next 12 months, compared with just 12% a year ago.

“Commodity prices may be coming off their peak, but the delay in rises being passed on means, for many consumers, the worst could still be to come,” said Trefor Griffith, Grant Thornton UK head of food and beverage.

Suppliers had been resisting price increases due to pressure from the big retailers, said Griffith. But now higher commodity prices were finally being passed on to retailers, consumers would be likely to start feeling the brunt once Christmas was out of the way, he predicted.

“With only a month until Christmas, retailers are unlikely to increase prices right away. But in the new year, many will have to relieve the pressure,” Griffith said.

Although suppliers expect to able to pass on more cost, most do not expect to keep their bottom lines entirely insulated from commodity price hikes. The survey found 62% of businesses expected sales to increase in the next year, but only 43% expected improved profits