Let me be clear: I drink a lot of wine. Mostly Spanish red wine, to be precise. Shortly after the EU Ref results came out I was struck with, well, lots of bad feelings, but one of which was ‘how much is my Rioja going to cost now?’
Being a creature of habit, I do an online food shop every month and mostly buy the same products. It occurred to me yesterday that I might be able to test whether Brexit has already started affecting food prices and to get myself online and compare the cost of items I buy regularly, starting from March right through to the time of writing (mid-July).
It’s likely our food shop will be hit in the fallout of Brexit.
Back in March, a bottle of Rioja set me back £8.49. Today, it is actually £6.99. In fact, a lot of the Spanish wines are on sale. Incidentally, the Greek olives I normally get are also on sale. It’s also important to acknowledge that some of the food you buy is seasonal so that’ll affect cost throughout the year too. At the time of writing, peaches, strawberries and cherries are all on offer at the supermarkets – and you’ve guessed it, that’s because they’re in season.
In general though, there is absolutely no change to the price of my food, and there hasn’t been for at least six months.
It might be just too early to call, but at some point, it’s likely our food shop will be hit in the fallout of Brexit.
The UK produced 54% of the food it consumed it 2014, according to data from the UK Department of Environment, Food and Rural Affairs. A total of 27%, or more than a quarter, of food came from the EU, and the rest of our food imports came from various places around the world. You can have a look at the statistics in fuller detail here.
At the moment prices of goods traded in the EU, including food, are contained in the single market, which means no tariffs or restrictions.
This is one of the reasons why farmers can keep afloat while keeping the cost of four pints of milk to just a pound.
Even food produced here in the UK, such as UK beef, could cost us more because UK farmers have long been provided with redirected subsidies from the EU to keep their businesses going. This is one of the reasons why farmers can keep afloat while keeping the cost of four pints of milk, for example, to just a pound. We still don’t know what Brexit negotiations will mean for our access to the single market but in the meantime, we could still see food prices rise.
So, why? As the pound weakens, which it has done in recent months, imports will get more expensive and this will lead to higher inflation (i.e. an increase in prices).
Supermarkets could cut right through these costs and enter into a price war
Incidentally, when that happens, the Bank of England is likely to try and counteract the damage and encourage spending by lowering interest rates (the proportion of a loan which is charged as interest to the borrower). The BBC has many good explanatory videos on economics and inflation in particular if you’d like to know more.
To confuse matters for we shoppers even further, supermarkets could cut right through these costs and enter into a price war, something they might seem to do every bloody week. That means, for a time, you could see the cost of your shop go down, rather than up.
Have you noticed the price of your shop change dramatically in the last month? Let me know. I’m going to be keeping a very close eye on the following basic range foods from my monthly shop!
How much did my favourite food cost in July?
|Tomatoes x 6||£0.69|
|Eggs x 12||£2.25|
|Bananas x 6 (organic)||£0.96|
|Milk x 4 pints||£1|