Food prices in March 2023 were 8.5% higher than at the same time last year. This is a concerning statistic for both consumers and retailers alike.
But why is the cost of food skyrocketing? If it’s possible to understand the causes, there may be opportunities to use strategies to keep food bills as low as possible.
While this is a complex area, experts agree there are several factors that are linked to food inflation.
Supply Chain Disruptions
Supply chain disruptions can include a lack of laborers to grow food, transportation services going out of business, and retailers not having enough staff to keep groceries moving swiftly from their warehouses to their shelves.
When there is higher demand than can be met, it’s not unusual for prices to rise.
The food supply is heavily dependent on the weather. Having the right growing conditions is essential, and an extreme weather event can cause a food shortage. For example, a drought could mean that crops can’t grow, or intense heat could cause fires that burn through crop fields.
Should farmers have to put more time and money into cultivating food, they may need to charge extra to make their work profitable.
Energy Price Increases
Buying food is only one household expenditure that has gone up, and you’ll no doubt be concerned about the rise in your energy bills as well. But food suppliers and retailers also have to deal with these increased costs.
Although they will not want to lose customers by charging too much, they may find they can not provide a service without passing some of the extra cost to customers.
When food is expensive, you may find higher electricity, oil, and gas prices are a contributing factor.
Not every price increase is out of a food retailer’s control. One example of this is using too much food packaging material. This may have been a common practice many years ago, and having a large packaging surface is a good chance to advertise to consumers.
However, as packaging costs increase, retailers can make savings by using the right materials in lower quantities. This can also be an excellent selling point amongst consumers who are increasingly trying to be more eco-friendly when shopping. By avoiding retail food packaging mistakes, companies can make significant savings while boosting sales.
Let’s Hope the Cost of Food Will Go Down Soon
The cost of food is already at an incredibly high level, and it would be a welcome relief to see it come down soon. To tackle the problem there are huge issues to resolve such as streamlining the supply chains, finding ways to cope with severe weather conditions, and lowering energy prices. Retailers should also consider their current packaging practices and try to waste fewer materials.