Beef prices in the UK have surged more than 20% over the last 12 months. This dramatic increase has been a leading factor in fueling food inflation, up 2.8% in the past year through May. The British Retail Consortium (BRC), representing supermarkets and other retailers, highlighted that red meat consumers “may have noticed their steak got a little more expensive” this month, indicating the direct impact of these price increases on shoppers.
The principal driver of this inflation is the skyrocketing farm price for beef, which has recently hit all-time highs. Nick Allen, chief executive of the British Meat Processors Association, explained that competition between supermarkets previously flooded the market with beef and kept prices steady. That dynamic has drastically changed now.
Jilly Greed, fourth-generation arable farmer and suckler beef producer from Devon. She described that the game today is all about supply and demand. “It is entirely the maths – it’s about supply and demand,” she stated, elaborating further on the issue. Greed demonstrates a 5% cattle deficit at the moment. At the same time, consumer demand has increased by 1%, pushing prices up even further.
Tomas Maunier, cofounder of Fazenda, a chain of Brazilian-inspired steakhouses with eight outlets in the U.K., agreed that beef cost has skyrocketed. They’ve gone up by an unbelievable fifth! Maunier observed that Fazenda has passed through roughly 2% of the increased running costs into its prices. The recent spike in production costs, in-largely exacerbated by the national minimum wage, leaves little room for business to absorb costs and maintain stable prices. In fact, beef in particular has surged by nearly 20% over the past year. The largest amount of that increase happened just in the past half year. Businesses aren’t able to pass all of those skyrocketing costs on to our guests, he noted.
These inconvenient truths have led to pain all up and down the supply chain, Greed added. At the core of it all, she underscored, is that farmers are really getting squeezed. Meanwhile, consumers are dealing with rising prices at grocery stores and eateries. Allen reiterated this sentiment, stating, “It’s not surprising. The farm price for beef has been going up and up to the point that it’s now at record levels.”
Production costs across the board are weighing heavy on the meat industry. Unfortunately, at the same time, unpredictable demand adds another layer of complexity to an already challenging economic climate. While beef prices stay inflated, consumers should continue to expect further increases to grocery bills and food service operations.