This Christmas, tuck into the turkey but go easy on the pudding.
Britons are facing a jump in prices for traditional pudding ingredients as the Brexit vote has sharply weakened the pound. However, the cost of Christmas dinners is almost unchanged from a year ago despite a rise in pork and vegetables.
The slumping pound has helped push up the cost of key ingredients for Christmas pudding by 21 per cent, while the wholesale cost of turkey dinners is 1 per cent higher than last year, according to Mintec, the commodity data group.
Although supplies in raisins were plentiful, with sterling almost 18 per cent lower than a year ago, import prices were higher for the UK market. “The weaker pound is definitely having an impact,” said Avneet Deol, senior data analyst at Mintec.
Christmas pudding costs were also driven higher by higher import prices for sugar. A fall in milk output pushed up butter prices while UK wheat prices rose because of lower output and increased demand as a higher quality domestic crop led to buyers reducing their exports for UK wheat.
The currency effect is exacerbating the rebound in many food commodity prices, such as dairy, sugar and meat, as several years of weak prices have led to producers cutting output. Dave Lewis, chief executive of UK retailer Tesco, recently acknowledged that “inflationary pressure” was increasing the price of staple foods.
The wholesale price for turkey, the largest component of Mintec’s Christmas Dinner Index, is down 2 per cent from a year ago. Prices last year rose after the avian flu outbreak in the US affected the global poultry trade.
Pigs in blankets cost more this year on the back of higher pork prices which have risen 14 per cent. UK farmers reduced their herds in the face of low prices earlier this year, but a sharp increase in exports to China because of the fall in the pound added to the supply tightness.
Pork production was down, with slaughter levels down 3 per cent in September from a year ago, while exports to China by value more than doubled in August, according to the UK Agriculture and Horticulture Development Board.
The UK’s cold, wet conditions in early summer affected vegetable production, including potatoes and onions. Prices for potatoes, onions and parsnips are higher, although carrots have been depressed as a result of good harvests around Europe.
Despite bumper harvests in grains in the northern hemisphere, higher sugar, meat, dairy and vegetable oil prices have meant that the UN Food and Agriculture Organisation’s food price index is up almost 16 per cent this year.
After Christmas dinner, hold back on the coffee and chocolate. Arabica coffee beans are up more than 20 per cent this year but, in sterling terms, are 43 per cent more expensive. The cost of chocolates has also jumped, with the price of ingredients up about 40 per cent.