Your food shop is still eye-wateringly expensive, this is what has to change to bring prices down

Chocolate, coffee, beef, butter and fruits like oranges are among the products that have seen the most eye-watering rises; all contributing to a rate of food price inflation that has remained stubbornly and unacceptably high.

It’s the result of a perfect storm of factors: crop diseases, bad weather, over-reliance on individual countries, tariffs, new packaging rules and other trade complexities.

The longer these prices remain high, the more experts and economists are beginning to ask a concerning question - is this the new normal? Will prices return to reasonable levels or have they become stuck?

The answer is that it needn’t be. We shouldn’t view high food prices as an inevitability, but nor should we view them coming down as one.

I work with supermarkets, brands and manufacturers across the UK, Europe and the US through my company Keychain. What it’s taught me is that the answer to this crisis lies in the most opaque aspect of the supermarket business model - the supply chain.

So let’s pull back the curtain to find out what’s not working.

Supermarkets are a miracle of logistics: sourcing hundreds of thousands of products from across the world continuously, allowing us relatively cheap access to a range of products that would’ve been unfathomable two generations before.

Eighty years ago, a banana was seen as an exotic oddity to be won in competitions or displayed to guests at a party, now they can be bought in bunches of 5 for £2.

As time has gone on, the system has grown in size and complexity to incorporate more products and more people. That complexity has in turn made the global supply chain inflexible, unadaptable and vulnerable. The scale required to pivot has become insurmountable.

This means that if there is an unexpected shock - as has been happening relentlessly the past few years - those supply chains are unable to move quickly and adapt to new circumstances.

Take, for example, the effects of climate change: A lot of the products that are rising in cost are in large part because of poor weather in the places where those products are grown.

In the case of goods like coffee and oranges, an over-reliance on places like Brazil has meant prices are massively dependent on whether or not there is a good harvest there, which has recently not been the case.

The same goes for man-made shocks like tariffs and trade barriers. The ability for supermarkets to pivot supply quickly and seamlessly would make them more resistant to those shocks and therefore make them able to pass on that saving to the consumer.

And it’s not just increasing prices and instability in the sourcing of raw materials that is causing prices to rise, it’s increases in the cost of packaging as well.

In the UK we’ve recently seen an example of how a lack of flexibility can pass a high cost onto the consumer. The Extended Producer Responsibility, or packaging tax, is a new levy aimed at making the entities that create the most packaging waste more responsible for it, with plastic being taxed at a higher rate than more sustainable packaging options.

With a more dynamic system for sourcing products and packaging, supermarkets would be far better able to move with any legislation that comes into force and thus save the consumer from incurring higher costs.

My work with supermarkets through Keychain, which launched in the UK this week, has shown me how far there is still to go in achieving this.

But I believe it to be a necessity. All of these shocks - climate-related disruption, trade wars and new environmental regulations - aren’t going anywhere. In fact, I’d venture they’ll only become more frequent.

The same spirit of radical innovation and dynamism that created this miraculous global system of just-in-time trade now needs to be applied to safeguarding that system for the future, and making it adaptable to a world prone to instability.

Luckily, we’ve never before had technology like we have now; Technology that gives us the ability, at a click of a mouse, to track, manage, evaluate and build a supply chain from hundreds of thousands of options.

We can’t be lethargic, waiting for food prices to come down on their own.

The factors causing them to remain high are here to stay.

We have to be proactive if we want to see a return to a time when we’re not shocked by the price on the shelf.”

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Food Price expert Oisin Hanrahan, is the CEO and Founder of supply chain platform Keychain

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