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The rise of food and drink prices have been described as “terrifying” by Food and Drink Federation (FDF) Chief Executive, Ian Wright. Higher food prices is a result of inflation within the UK economy, and could very soon be passed on to consumers. 

Discover more about how this has affected gold and silver prices in this article.

 

 

Ian Wright warned MPs that they need to think seriously about inflation. Food and drink firms are facing rises in costs amid worker shortages and supply chains.

“In hospitality, inflation is running between 14 per cent and 18 per cent, which is terrifying,” stated Wright (BBC News, 2021).

Wright went on to describe the situation as “concerning” as the price rise for food companies’ ingredients might have an effect on consumer prices and can affect the most vulnerable. “Inflation is a bigger scourge than almost anything because it discriminates against the poor.”

 

Inflation on the Rise

Inflation in the UK economy has been a rising concern. Governor Andrew Bailey has warned The Bank of England saying it “will have to act”, suggesting that interest rates may increase from the historic low of 0.1%.

The Bank of England stated that, as the UK economy recovers from Covid-19, inflation is set to exceed 4% before falling back. However, the surge in energy prices recently has been pushing inflation higher than expected (Guardian, 2021).

 

 

The UK’s inflation rate was 3.2% in August however, in a report released by ONS on Wednesday, 20th October 2021, it was revealed that inflation fell back slightly in September. This came as a surprise, particularly with the soaring fuel prices, shortages of HGV drivers and other events happening around that time.

 

 

The Office for National Statistics reported the consumer prices index dropped to 3.1% from 3.2% in August. The ONS explains the main contributor to this unusual dip were increased prices for transport, as well as an overall rise in prices, along with household goods, food and furniture.

It was added that hotels and restaurants also contributed to decreasing the inflation rate. This is due to their prices rising less this summer in comparison to the same time last year, when the government’s Eat Out To Help Out scheme took place.

Even though the figures are positive and inflation seemed to decrease, it is not yet having a beneficial effect on drink and food prices in the hospitality sector.

What has this done to precious metal prices?

 

Food and Drink Warnings Affect on Gold Prices

Gold prices rose by £6.57 an ounce on the day Ian Wrights speech was covered. At the start of 20th October 2021, gold spot prices were £1,282.35 and followed a steep bearish trend to its highest £1296.62 at 13:00. From then on while encountering fluctuations, gold prices followed a bullish trend and ended the day at £1,288.92 (00:00).

 

Food and Drink Warnings Affect on Silver Prices

Silver prices rose £0.42 an ounce on the day Ian Wrights speech was covered. At the start of 20th October 2021, silver spot prices were £17.14 an ounce. Even though encountering some minor fluctuations, silver prices followed a steady bearish trend hitting its highest £17.65 before slipping down and finishing the day at £17.57 (00:00).