The cost of food across the United Kingdom has continued its upward trajectory, with food-price inflation hitting 3.1% year-on-year in April, according to the latest data from the British Retail Consortium (BRC).
This is the sharpest increase since June 2024 and builds on an already challenging environment for consumers and businesses alike. For UK investors, this data point signals shifting pressures on the staples sector and potential opportunities for portfolio adjustments.
What’s Behind the Numbers?
Food inflation is being driven by a combination of factors, including rising input costs, persistent labour shortages, and geopolitical disruptions. To better understand the scale of April’s increase, it helps to break down the numbers by category:
- Dairy Products (+4.2%) – Cheese, milk, and other staples have faced sharp price hikes due to higher energy and feed costs, plus labour shortages on farms and in logistics.
- Meat and Poultry (+3.8%) – Elevated feed and energy bills, compounded by avian flu outbreaks, are pressuring supply levels.
- Fresh Produce (+2.9%) – Import-dependent fruit sees high inflation, while domestic vegetables benefit from earlier favourable growing conditions, though harvesting labour remains tight.
The Role of Input and Labour Pressures
Key drivers include:
- Input Costs – Fertiliser, energy, and packaging materials remain expensive, squeezing margins across the supply chain.
- Labour Shortages – Post-Brexit workforce constraints and global wage pressures are challenging producers and distributors alike.
Impacts on UK Consumers
The average household is feeling the pinch, with essentials like milk and cheese edging toward luxury status. Consumers are trading down to own-label products, creating rotation opportunities in defensive staples.
Three Defensive Staples Stocks to Watch
- Tesco PLC (TSCO.L) – UK’s largest grocer, with scale and pricing power, expanding own-brand ranges.
- Unilever PLC (ULVR.L) – Global staples leader with pricing flexibility and strong brand loyalty.
- Associated British Foods (ABF.L) – Diversified food & retail exposure (Primark) and well-positioned sugar business.
Actionable Investment Ideas
For broad hedging in staples:
- Vanguard Consumer Staples ETF (VDC) – Global exposure to Nestlé, Unilever, P&G.
- SPDR MSCI Europe Consumer Staples ETF (STN) – European staples diversification including UK names.
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