Fish and oils/fats, the bad boys of the 2018 pricing index, are still up there with high levels of inflation, but there are signs that some of the other upward movers such as milk, eggs and cheese may be about to ease a bit. But uncertainty in food markets is still the dominant sentiment, with vegetables breaking out of their all-year pattern with a sudden, though not unexpected, leap in price.
UP! Shrinking vegetables mean growing prices
Chefs and shoppers alike have been moaning about how much more peeling there is to do this year because of much smaller vegetables, all produced as a result of spring’s cold weather followed by the June/July heatwave. These abnormally low yields have been hitting prices in recent weeks, and an index (vegetables) that has been running within a narrow band of just +/- 1.6% for much of the year has broken free this month and shot up 5%. Expect this higher price to hold or worsen until next year’s stocks feed through, particularly as our winter vegetable imports could be impacted by adverse exchange sentiment in advance of Brexit.
ONE TO WATCH! Milk, cheese and eggs on the turn?
The direction of this category has been sneaking upwards all year, but I expect this to change fairly soon. Milk prices have been falling since August and this will continue into 2019. With a mild and damp autumn, grass has recovered well and milk yields have been rising. Concerns about stocks of winter feed have been reducing.
Eggs are set for a boost as production takes a sharp leap in the coming months. Good times, then, for any new omelette and milkshake brands.
ONE TO WATCH! The divergence of fruits
European harvests of winter fruit varieties have been encouragingly strong this year, and we are seeing large and healthy fruit at good prices. At this time of year though, a high proportion of our seasonal/soft fruits are imported, and these are vulnerable to weather conditions in growing regions and adverse exchange rate movements. Typically, we see a big fall in the price of fruit in December, but it’s uncertain whether this will be replicated in 2018. If in doubt, stay on the apples and pears.
UP! Increasing Scottish salmon stocks won’t stop fish rising again
Scottish salmon production has been increasing for some time now, recovering well from the huge sea lice problems of 2016/17. Whilst this will contribute to more stability in a market that has seen wild swings in 2018, there is still a degree of uncertainty caused by the Scottish Environmental Protection Agency’s rating of almost 20% of the nation’s salmon farms as poor/very poor/at risk. There will likely be stringent measures taken, and stock reductions or even closures may not be out of the question.
Elsewhere, the quotas for Barents Sea white fish have been trimmed again – good news for stocks, but not so good on price, as cod volumes will fall by over 6% and haddock by 14% in 2019.
In recent days, the pound has fallen sharply as a result of Brexit political issues, and in fish markets this can feed through more quickly than in others. So, don’t bet on fish prices falling for a while yet.
ONE TO WATCH! No-deal Brexit
There is less than four months to go before Brexit, and there is broad agreement that an exit deal requires completion within the next four weeks for it to be ratified in time. A no-deal Brexit would likely result in another significant correction in the value of the pound (consensus -10% to -20%), which in turn will inflate imported food prices significantly next year.
Conversely, any deal that has tariff-free and frictionless status will strengthen sterling, with a positive impact on prices. At some point in the next month or two, this uncertainly will become clearer.
Until then try not to think about it too hard, because three years on from Cameron’s announcement of a referendum, pretty much anything could still happen.
Resources to help you plan for a no-deal Brexit are available here from Prestige Purchasing.