Shoppers are facing a slew of price hikes across beef, milk and eggs, as a combination of strong demand, tight supply and rising production costs drive renewed inflation.
Analysis by The Grocer using Assosia data shows prices are soaring in the beef category in particular, with a large number of lines having seen multiple price increases over the past two months.
Of the 524 beef mince, burger, joint, steak and diced lines on sale in the nine largest supermarkets from 10 March to 8 May, some 196 saw price hikes of more than 10%, with an average increase across all lines of 8.2%.
Cost of beef soaring
The biggest upward move was for an Asda sirloin steak (227g), which has risen in price three times since the start of March, with a total hike of 47.3% to £6.98.
A Tesco Beef Quarter Pounder four-pack (454g) saw the second-biggest increase, up 47.1% to £3.75 after two hikes in the space of two months, the data showed, while an Exceptional by Asda British Fillet Steak (220g) saw the third highest move, up 45.5% to £12.98 – after three price increases since the start of March.
The key driver of the increases was a significant tightening in beef supply, according to AHDB’s lead retail insight manager Grace Randall.
UK beef production is forecast to fall by 5% this year, while farmgate prices are at record highs, with AHDB’s benchmark GB R4L steer price hitting 713.3p/kg on 3 May, up 7% since 8 March and by 43.8% year on year.
“Retailers and processors have been footing a lot of this additional cost, but some of this inflation is making its way to consumers,” Randall said.
Her comments were echoed by the Association of Independent MeatSuppliers’ Inflation Tracker report for April – drawing on AHDB data and its own monitoring of the chicken market – which showed total retail inflation across beef, lamb and chicken was up 11.5% year on year, driven by 12 months of “steep rises” across beef (+20.96%) and lamb (+19.92%).
Beef sales rebounded last year, with NIQ data for The Grocer’s Top Products Survey showing volumes up 2.1% and value sales rising 8.5% to £3.1bn, despite an average price hike of 6.3%.
Demand was strong as many consumers were “slightly better off than in 2023, and trading up”, Randall said.
But she warned, with supply set to remain tight for the foreseeable future, that beef prices could continue to rise for consumers. This, along with a general scaling down of meat promotions due to the supply situation, could “dampen down demand”, she added, especially for currently popular premium cuts.
Milk prices up
Prices are also up in the dairy aisle, with four pints of own-label milk becoming dearer over the past month, jumping from £1.45 to £1.55 in most retailers – a level not seen since the rampant inflation across the category in 2022.
The increase (and corresponding hikes for pints, two pints and six pints), as in beef, comes amid a big jump in farmgate prices. The UK All Milk average price hit 46.09p per litre in February [AHDB], up 18.7% year on year.
Again, tight supply, particularly in Europe, was a key driver, said Kite Consulting director John Allen. “Unlike in 2022 [when farmgate prices hit record highs of over 50ppl], this time it’s less about rising production costs and more about a big, government policy-driven reduction in volumes in key markets such as France and Germany,” he suggested.
Allen told The Grocer that total global milk production was “up by about 1% globally, when demand says it should be at about 2%”.
For eggs, average prices are up 4% year on year, according to Assosia data, and are showing no sign of reducing.
Some lines are up to 28% more expensive compared with the start of the year, due to what St Ewe Eggs MD Martin Glinski described in February as “cost drag”, as retailers and suppliers adjusted to historic cost hikes from 2024, which have taken some time to show.
Wholesale prices are also being influenced by continuing strong demand and tight supply, according to a report this week by industry website Poultry Network, which cited drivers such as avian flu and the transition to cage-free systems, which mean ”the industry is still barely matching the marketplace’s needs”.
Elsewhere, global commodities such as coffee are still seeing big price moves, with supply chain disruptions, speculative trading and droughts in major producers Brazil and Vietnam all destabilising markets.
The challenges are now feeding into retail,with Assosia data for The Grocer’s Key Value Items tracker this week showing the average price of Nescafé Original instant coffee (100g) up 30% year on year. The brand’s Gold Blend Instant Coffee (100g-200g) was also up in price by 7% versus last year, as were a host of own label lines.
The BRC last week warned food inflation, at 2.6%, had hit an 11-month high, amid a “mountain” of rising employment costs. “The days of shop price deflation look numbered,” warned its CEO Helen Dickinson.
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