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Coronavirus: Food prices could rise as UK faces seasonal worker shortages

Tom Belger
·Finance and policy reporter
·2-min read
Onions at a supermarket in London. (Isabel Infantes/EMPICS Entertainment)
Onions at a supermarket in London. (Isabel Infantes/EMPICS Entertainment)

UK shoppers may have to pay more for fresh fruit and vegetables as a shortage of seasonal workers drives up farmers’ costs, according to retail chiefs.

The British Retail Consortium (BRC) said on Wednesday the coronavirus could affect seasonal labour on fruit and vegetable farms in future.

The UK government has acknowledged lower numbers of migrant workers coming to the UK could result in shortages. There is growing concern restrictions and fears over travel during the pandemic are limiting seasonal labour flows, prompting the EU to encourage governments to ensure their “smooth passage” and treat them as critical workers.

Environment secretary George Eustice encouraged British workers to “fill that gap” last week, with the seasonal horticultural labour force overwhelmingly from the EU. Pay levels may have to rise to attract more Brits to the often low-paid and physically demanding roles.

Read more: Warning over food prices despite falling UK inflation

Britain’s political environment and the pound’s decline since the 2016 referendum had already been taking a toll on migrant worker numbers. The National Farmers’ Union has warned the government’s plans to end the free movement of EU workers next year and a strict cap on seasonal worker visas are exacerbating the problem.

Non-food prices drop as households cut spending

New figures from the BRC and data firm Nielsen show price trends have been headed in the opposite direction in recent months, however.

Lower global food prices reduced the annual rate of inflation for fresh food from 0.6% in February to 0.4% in March. Wider food inflation also slid from 1.6% to 1.1%.

The price of retail goods other than food have actually fallen amid weaker household demand and high street troubles. The BRC expect this trend to continue amid rising economic uncertainty and job losses, with people reconsidering their spending to save more.

Read more: ‘Perfect storm’ of Brexit border checks and immigration crackdown could cripple UK farming

Retailers “continued to battle hard for consumer spending by keeping prices down wherever possible” for non-food goods, according to Mike Watkins, head of retailer and business insight at Nielsen.

Supermarkets have also largely kept a lid on prices amid the current unprecedented spike in demand, perhaps fearful of being accused of profiteering.

Ruth Gregory, senior UK economist at Capital Economics, made a similar prediction last week that food prices could rise later this year as the coronavirus has pushed up demand and hit supply chains.

But she predicted the coronavirus will drag average inflation for all goods and services below 1% in the months ahead, with falling fuels costs, air fares and wage growth exerting particular downward pressure.

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