Ulster Fry Index: Pandemic, Brexit and climate play havoc with agri-food prices
NEW research from Ulster Bank has highlighted the diverse impact of the pandemic, Brexit and climate on the north's agri-food sector over the past year.
The Ulster Fry index provides an annual breakdown of the price change of items that comprise a traditional cooked breakfast.
It’s seen as a useful way of engaging consumers in economics and help communicate what’s happening with inflation.
While the overall fry index increased 1.7 per cent in 2021 - the first rise in three years - it was a very different year for various sectors.
Egg prices have fallen seven per cent in a year, while the price of tomatoes rocketed by 15 per cent.
Ulster Bank’s chief economist Richard Ramsey said the fall in the price of eggs is believed to be linked to an oversupply due to the impact of Covid-19 restrictions on the operation of the hospitality sector, whilst tomato prices have been impacted by a poor harvest and long winter.
The price of sausages is up 5.1 per cent and the price of butter is up 3.7 per cent, believed to be in part related to Brexit.
All prices are based on the latest figures from the ONS Retail Prices Index (RPI).
Although the index fell in both 2019 and 2020, the long-term trajectory has been upward.
The Ulster Fry Index is 6.5 per cent higher than it was five years ago and 23 per cent higher than it was at the time of the last recession in 2008.
Mr Ramsey said that once the Irish Protocol is implemented in full, it’s anticipated that the additional costs of more bureaucracy will result in higher food prices.
He said the overall rise in the index for 2021 was due to some of the challenges that have been experienced in the last 12 months.
“As the food supply chain grappled with the impact of Covid-19, it faced increased costs to do so, and these increased costs will have found their way into the prices of the goods we buy.
“On the other hand, with the hospitality sector shuttered for a prolonged period of time, this led to an oversupply of eggs which has seen prices go down.”
Recent analysis from Ulster Bank found that although farm business income rose by an average of 27 per cent during the past year, it didn’t translate into farm profit due to the hike in costs, particularly in relation to feed, fertilizer and fuel.
“So, whilst the prices paid by consumers for a range of items rose, this money wasn’t going into farmer’s pockets as their profits were effectively squeezed,” said Mr Ramsey.
“In 2021, the likelihood is that the prices consumers pay for a range of food items will continue to rise. But with improved farm prices particularly in milk and beef so far in 2021, it’s likely this year will show an improvement in both farm income and farm profit.”