Some people may have noticed that there has been a huge rise in the cost of red wine, coffee and gammon, while cost of cream crackers has risen by 51% in a year. Since December last year, they are up from 55p to 83p.

The cost of living is now 4.8% higher compared to 2010, according to official figures. According to the Office for National Statistics (ONS), the average cost of Christmas dinner has risen by 7.5% in Britain.

Bacon to wrap around chipolatas or dress the turkey breast is up by more than 6%, an after-dinner cup of coffee is now 21% more expensive and a glass of red wine is up by 14%.

The ONS acknowledged all the individual items needed to make the perfect Christmas dinner from the hamper of goods it uses to analyse inflation throughout the year – even though it had to make some changes for seasonal products, for example replacing Christmas pud with a Victoria sponge.

However, shoppers tempted to make a similar change to their Christmas dessert may want to think again, as the price of a sponge cake has increased by 18.2% since last Christmas, because of the rise in the cost of the ingredients to make the cake, according to the ONS.

Mark Joll, director of online cake retailer Sponge.co.uk, said “A sponge cake is made up of equal parts sugar, butter, egg and flour and the cost of all these have risen since last Christmas.”

Joll explained that this Christmas, his company is paying around £24 for a 25kg bag of sugar, compared with £16 last year. He added, “Butter is about 15% to 20% more,

“And the cost of eggs has gone up in the last few weeks due to increased costs associated with the transportation from mainland Europe to the UK.”

What are the Reasons for the Rise in Costs?

The British Coffee Association put the 50p increase in a jar of coffee down to bad weather, production costs and “supply and demand issues”.

Executive director of the British Coffee Association, Dr Euan Paul, said “Whilst coffee consumption has continued to increase globally, poor climatic conditions in several coffee growing regions has yielded significantly smaller coffee bean crops this year compared with previous years,”

He also added that the big increase in the cost of distribution and energy prices had added to the pressures.
The ONS hamper does not include a turkey, one of the most important Christmas dinner components to most people, however, it does include turkey steaks, the budget alternative. The cost of these has increased from an average of £7.85 per kg last November to £8.15 this year – a below inflation increase of 3.8%.

The price of broccoli, hard cheese and frozen garden peas also rose below inflation and carrots and potatoes are cheaper than 2010.

Restaurants are also pointing their finger at the cost of supplies, the increased cost of UK restaurant insurance and other overheads like hiring staff.

Big supermarkets are being blamed by some food manufacturers for the higher price tags. A spokeswoman for United Biscuits, who owns the Jacob’s cream cracker brand, explained that it had not seen any big rises in the price of base ingredients that could have led to such a huge rise.

She said “We did raise the recommended retail price, but not by anything like as much as 50% and it is retailers that set the price anyway,” she said. The price of wheat – one of the main ingredients in cream crackers – has fallen since reaching a high of almost $9 a bushel in early 2011.”

Wine merchant Berry, Bros & Rudd’s spokesperson, Alun Griffiths said there was nothing on the supply side that could have directed to a 14.2% increase in European red wine. He said, “The government’s VAT increase added 2.5% and increased duty on wine has added around 7%, but not as much as 14% to 15%. Wine producers know how tough the environment is and they have kept prices remarkably stable during the last year.”

Waitrose spokesman disagreed with the ONS findings, “Waitrose has made every effort to keep prices as low as possible this Christmas and has even reduced the price of some products – for example, the essential Waitrose cream crackers cost 10% less than last year.”

Philip Gooding from the ONS said, “Our methodology means we collect prices from all over the country, from the supermarket chains to small retailers and tiny independents, so prices vary. It’s very difficult for us to get a total cost for a Christmas meal because that depends on quantity and how much people eat. You wouldn’t eat a kilo of back bacon, for example, or a bottle of red wine, white wine, fortified wine, and champagne. Well, I wouldn’t.”