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2.1 : UK trend in food and non-alcoholic beverage prices in real terms, January 1996 to July 2017
Food and non-alcoholic beverage prices1 rose 11.5% in real terms between 2007 and their peak in February 2014 as measured by the Consumer Price Index, following a long period in which they had fallen. Gradual price reductions since then have reduced that real terms increase to 4.1% compared to 2007.
Food and non-alcoholic beverage price inflation in real terms is unchanged to 12 months ago although in 2017 prices started to rise after a long period of negative inflation.
Successive spikes in the price of agricultural commodities since 2007 have led to higher retail food prices. They have not returned to the low price levels of pre-2007.
Oil prices also rose over this period, and inflation was higher than historically, but food prices have risen above inflation.
Those on lower incomes tend to buy different food items to those on average or high incomes but food prices for these different shopping baskets have risen at about the same rate.
A rise in food prices is more difficult for low income households to cope with because those on low incomes spend a greater proportion of their income on food - a rise in food prices has a disproportionately large impact on money available to spend elsewhere.
Source: Consumer Price Indices, (ONS)
1 Excludes catering.
2.2 : Trend in share of spend going on food and non-alcoholic beverages in low income and all UK households, 2003-04 to 2015
The relative affordability of food can be measured by the share of the household budget that goes on food. Low income households are of particular concern as they tend to have a greater percentage of spend going on food.
Food is exerting greater pressure on household budgets since 2007 when food prices started to rise in real terms.
Averaged over all households 10.7% of spend went on food in 2015, 0.3 percentage points above the 2007 level.
For households in the lowest 20% by equivalised income2 16% of spend went on household food, 0.8 percentage points above 2007.
2 See Glossary for definition of equivalised income.
2.3 : Household income (after housing costs) and food prices in real terms (UK) 2015-16
Income after housing costs fell 7.1% between 2002-03 and 2015-16 for low income 3 (5th percentile) households. Over the same time period, food prices (in real terms) increased 7.7%. In 2008-09 the income for low income households reached its lowest level, 15.3% below that of 2002-03. Small decreases between 2011-12 and 2013-14 were partially reversed in 2014-15 when income increased by 2.7%, coinciding with a 1.7% fall in food prices.
2008-09 saw the biggest increase of 5.3% in the price of food and non-alcoholic drink. 2015-16 saw the largest decrease of 2.6%. The biggest change since 2002-03 was in 2013-14 when there was an increase of 12.5%.
In 2014-15, all income groups, with the exception of the lowest (5th percentile), saw increases in income, with the 80th percentile seeing the highest increase of 2.6%. All but the lowest income group 4 were above the 2002-03 level with the 80th percentile group seeing the highest increase of 12.6% while the 5th percentile group saw a 7.1% decline.
3 See Glossary for definition of Low income.
4 Households Below Average Income, DWP June 2016.
2.4 : UK retail price changes by food group, 2007 to 2016
|Food group||% change between 2007 and 2016|
|CPIH (overall index)||21%|
|Milk, cheese and eggs||17%|
|Vegetables including potatoes and tubers||18%|
|Mineral waters, soft drinks and juices||24%|
|Food and non-alcoholic beverages||28%|
|Bread and cereals||28%|
|Coffee, tea and cocoa||35%|
|Oils and fats||39%|
|Sugar, jam, syrups, chocolate and confectionery||41%|
All food and non-alcoholic beverage groups have risen in price since 2007 (the start of the recession), with rises ranging from 17% to 41%. Coffee, tea and cocoa, fruit, sugar, jam and confectionery, and oils and fats have all risen in price by 35% or more since 2007. Food and non-alcoholic beverage prices rose 4.1% in real terms between 2007 and 2016.
Rising prices seen up to 2014 have begun to fall over the last couple of years. From 2015 to 2016 prices fell in all food groups with the exception of fruit which increased by 1.1% and coffee, tea and cocoa which remained unchanged. Catering increased by 2.2%.
Vegetables including potatoes and tubers and meat products saw the greatest falls, both down by 4.1% between 2015 and 2016, while milk, cheese and eggs saw a fall of 3.4%.
Food price rises have a strong effect on food shopping for low income households. Since 2007 households in decile 1 (lowest income group) have bought less lamb, beef, bread, fish, soft drinks and potatoes, but more pork, eggs and cereals (excluding bread, cakes and biscuits)5
5 Family Food 2015, Defra, March 2017.
2.5 : Percentage change in food purchases 2007-2015, in low income households and all households (UK)
|Change in quantity purchased between 2007 to 2015||Income decile1||All households|
|Biscuits & cakes||3%||-1%|
In 2015 the lowest income households (equivalised income6 decile 1) purchased more fruit, pork and biscuits and cake than in 2007, while all households purchased less of all the staple foods below. While all households purchased 15% less fruit in 2015 than in 2007, low income households purchased 1% more.
Low income households saw a larger decrease in purchases of lamb, fish, beef and alcoholic drinks than all households. In 2015, low income households purchased 60% less lamb than in 2007, but all households only purchased 37% less. In this period lamb increased in price by 58%, the highest increase of all these foods.
In 2015 average UK households purchased 7.2 per cent less food than in 2007 while spending 16 per cent more. Households in income decile 1 (lowest income group) spent 26 per cent more on food in 2015 than in 2007 and purchased 2.6 per cent less.
Food is the largest item of household expenditure for low income households after housing, fuel and power costs.
Source: Family Food 2015, Defra
6 See Glossary for definition of equivalised income
2.6 : Attitudes towards British food purchases in the UK (2016)
When surveyed, 60% of shoppers agree that they try to buy British food whenever they can while 8% disagree. 76% agree that it is important to support British farmers while only 3% disagree.
However, 44% think that British food is more expensive than imported food and 41% are prepared to pay more for British food. 21% aren’t prepared to pay more while 11% disagree when asked if British food is more expensive.
According to the survey 45% think that British food tastes better while 9% disagree.
52% were undecided as to whether it is important to support British farmers while only 29% were undecided when asked whether they were prepared to pay more for British food.
Source: Lightspeed GMI/Mintel
2.7 : UK trend in sales of ethical produce
Sales in ethical food and drink, including organic, fair-trade, free range and freedom foods rose to £9 billion in 20157, 9.4% of all household food sales.
Sales of ethical produce have increased year on year since 2007, despite the economic downturn.
Rainforest Alliance made up the largest single share in 2015, accounting for 23% of the total ethical food sector at £2.0 billion; unchanged from 2014. Organic products are the next largest contributors at 19% (£1.7 bn) followed by fairtrade at 17% (£1.6 bn).
Sales of organic food and drink have been steady in the last few years, although still 12% down on their peak in 2008.
Sales of freedom foods rose by 29% in 2015 to £1.6 bn while free range poultry fell by 5% to £0.3 bn.
Figures are determined by the Ethical Consumer Market Report by The Ethical Consumer Research Association based on administrative data held by ethical labelling organisations, trade associations and market research data.
7 Excludes food and drink boycotts.
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Economic Definition of food and agri-food sector
The UK food sector is defined as food manufacturing, food wholesaling, food retailing and non- residential catering. In terms of the standard industrial classification (SIC 2007) it is defined as:
|Food Manufacturing||10 + 11|
|Food Wholesaling||46.3 (excluding 46.35) + 46.17|
|Food Retailing||47.2 (excluding 47.26) + 47.11 + 47.81|
The deductions are to remove non-food items as far as possible.
The agri-food sector is the food sector plus agriculture and fishing. Agriculture and fishing are shown in several charts for comparison.
Net capital expenditure
This is calculated by adding to the value of new building work, acquisitions less disposals of land and existing buildings, vehicles and plant and machinery.
Gross Value Added (GVA)
GVA is the difference between output and intermediate consumption for any given sector / industry. This is the difference between the value of goods and services produced and the cost of raw materials and other inputs which are used up in production.
Total Factor Productivity (TFP)
Productivity measures the efficiency at which inputs are converted into outputs. Total Factor Productivity provides a comprehensive picture of growth.
The most commonly used threshold to determine relative low income is having an income which is less than 60% of the median in that year. Absolute low income is considered to be having an income which is less than 60% of the median in that year, adjusted for inflation.
The income a household needs to attain a given standard of living will depend on its size and composition. Equivalisation is a means of adjusting a household’s income for size and composition so that the incomes of all households are on a comparable basis.
Small and Medium Enterprises (SMEs)
Outside of these statistics, the definition of a SME can depend upon several factors, including turnover. For these statistics, a ‘small’ business is a private sector business with fewer than 50 employees. A ‘medium’ business is a private sector business with between 50 and 249 employees. A ‘micro’ business is a private sector business with between 1 and 10 employees, which, for the purpose of these statistics is incorporated within the ‘small’ category.