CONSUMERS and farmers can expect food, fuel, and energy prices to soar as a new cost of living crisis continues to heap pressure on Northern Ireland households.
It came as the annual Ulster Fry Index, which gauges the price of items making up a cooked breakfast, and which is Ulster Bank's annual fun barometer of how inflation is hitting home, rose by an eight-year high of 6.4 per cent, with every item on the plate going up.
Milk saw the biggest price increase, up 16.7 per cent in the last 12 months. There were also strong rises in the prices of a range of other items including tomatoes (13.6 per cent), eggs (8.2 per cent), butter (6 per cent), mushrooms (7.1 per cent), bread (5.6 per cent) and sausages (4.3 per cent).
And the bank's chief economist Richard Ramsey, addressing an agri-food breakfast in Belfast to mark Ulster Bank's continued sponsorship of the Balmoral Show, says the index contains a more important message this year than ever.
“Food makes up a significant proportion of household spending. Food and drink is also a key sector of the Northern Ireland economy. So, understanding how the price of food items is changing gives us some insight into both the current state of consumer finances, and also some of the challenges facing the agri-food industry,” he said.
“The fact that we are now in a new cost of living crisis means that creating understanding of price rises and cost pressures and where they are coming from is essential. What the Ulster Fry Index is telling us is that the prices of everyday items are rising really strongly at a time whenever households are also having to contend with big rises in their household energy bills.
“And the reality is that the index is only going to go one way in the foreseeable future -and that is up. Given the surge in energy prices already, alongside the disruption to the global food supply-chain stemming from the war between Russia and Ukraine, the index is expected to experience double-digit inflation over the next 12 months, which would see it hit a new record high.”
Mr Ramsey added: “Exactly this time two years ago, we thought we were entering a food crisis. People were stockpiling food items in the expectation of supply shortages and empty shelves, despite repeated reassurances from the industry and politicians. The reality was that the food and retail sectors pulled out all the stops to keep the supply lines open and to keep us fed.
“Today, two years on, a new and worrying food crisis is on the cards for different reasons. Russia and Ukraine are two of the most important producers and exporters of agricultural commodities in the world. Overall, the two countries export one in eight of all calories traded worldwide. What Saudi Arabia is to oil, Ukraine and Russia are to cereal crops. And don’t forget that cereal crops aren’t just a direct source of food, they are also a major indirect source of food in that they are fed to the livestock that we then consume.
“Food supply problems will further fuel economic nationalism due to the scramble for food security, meaning the further unwinding of globalisation, or de-globalisation. Indeed, such is the concern about the supply of food that countries are now hoarding and stockpiling by banning exports.”
Cormac McKervey, senior agriculture manager at Ulster Bank, told the breakfast: “Farmers in Northern Ireland are operating through hugely challenging times and the pace and scale at which input costs continue to rise is alarming.
“Farm gate prices for beef, lamb, grain, and milk are at an all-time high but margins remain static and, in some cases, are actually lower than this time last year.
“Many farmers are having to manage their cash flow extremely carefully, and while profitability has yet to dip, certain sub-sectors of the industry are being exposed to greater risks.”
