The headline inflation number and your grocery bill often tell different stories. CPI captures the rate of change in prices — once food inflation falls from 19% to 2%, the headline looks good. But prices don't go back down: the 19% rise is locked in. A basket of groceries that cost £100 in 2019 now costs roughly £123, even though food inflation is back near 2%. This distinction between the price level and the rate of change is the source of most public frustration with official inflation statistics.
What drove the food price surge of 2021–2022
Three shocks hit global food supply simultaneously. First, COVID-19 disrupted agricultural supply chains, labour availability at farms and food-processing plants, and shipping routes. Second, energy prices surged in 2021 — and energy is a major input to fertilisers, food processing, and transport. Third, Russia's invasion of Ukraine in February 2022 disrupted global wheat, sunflower oil, and fertiliser supplies: Ukraine and Russia together account for about 28% of global wheat exports and 75% of sunflower oil. The FAO Food Price Index hit an all-time record of 159.7 in March 2022. The World Bank Commodity Markets Outlook provides the commodity-by-commodity breakdown.
Why food prices haven't reversed
Global food commodity prices have fallen substantially — the FAO index is back near 124 — but retail grocery prices have come down only modestly. Three reasons. First, food retailers have sticky price-setting: margins were compressed during the commodity spike and retailers are reluctant to give back gains now that input costs have eased. Second, labour costs in the food retail and food-service sector rose sharply (wage inflation) and remain elevated. Third, energy and transport costs have fallen from their peaks but not to pre-2020 levels. The Eurostat HICP food component data and the ONS food price series both show this asymmetric pass-through clearly. For a full treatment of why prices rise faster than they fall see our sticky prices glossary entry.