UK inflation: Food prices ‘alarmingly high’ as ​​sugar and milk soar

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By Daniel Thomas Business correspondent, BBC News, May 24, 2023, 07:04 GMT

Updated 14 minutes ago

Image source, Getty Images

UK food prices continued to rise at the fastest rate in nearly 45 years in April, with staples such as sugar, milk and pasta rising sharply.

The rate of grocery price increases slowed slightly in the year through April, but at 19.1% was near record highs.

This comes as the UK’s headline inflation rate fell sharply to single digits for the first time since last August.

However, it did not fall as much as had been expected, and the chancellor said food prices remained “alarmingly high”.

Inflation is a measure of the cost of living and to calculate it, the Office for National Statistics (ONS) tracks the prices of hundreds of everyday items, known as a “basket of goods”.

The rate has risen over the past 18 months, as food and energy prices have soared, leaving many families feeling the pinch.

Inflation was 8.7% in the year to April – down from 10.1% in March but above the expected figure of 8.2%.

However, this does not mean that prices are falling, it just means that they are rising less quickly.

Chancellor Jeremy Hunt told the BBC the sharp drop was “welcome”, but admitted: “There are things under those numbers that show this fight is far from over.

“We have a long way to go.”

Inflation has fallen due to the fact that the rise in energy prices is slowing from the steep increases seen a year ago after Russia, a major oil and gas producer, invaded Ukraine and slapped sanctions on it.

Ukraine is also a large producer of grains and sunflowers, which are used for everything from bread to oil and animal feed. Wholesale food prices have gone up because the war has disrupted shipments to Ukraine.

The severe weather also damaged crops, including beets used to make sugar as well as some vegetables.

However, while food prices continue to rise at near-record rates, prices of staples such as bread, cereals, fish, milk and eggs are rising slightly less quickly.

“If you look at the prices businesses are facing and how much they pay for local food, that has fallen from more than 15% annually last month to less than 10% this month,” said ONS chief economist Grant Fitzner.

The prices companies pay for imported food have also fallen “significantly”.

But, he said, “Of course, that hasn’t been reflected on supermarket shelves yet.”

Retailers claim that it takes time for lower wholesale prices to hit supermarket shelves because of the long-term contracts they usually sign with food producers.

M&S President Stuart Machin said Wednesday that the retailer has invested in protecting customers from the full force of inflation, which has hurt its profit margin, but he said it was the right thing to do.

Although inflation has fallen, so-called core inflation – which is depressing food and energy prices – has continued to rise, raising fears that prices may continue to rise.

Inflation is higher in the UK than other developed countries such as Germany at 7.6%, France at 6.9% and the United States at 4.9%.

Labour’s shadow chancellor, Rachel Reeves, said families would be concerned that food prices and the cost of other necessities remain too high.

“They will ask why the Tory government still refuses to properly tackle the cost-of-living crisis, and why it does not introduce a proper windfall tax on the vast profits of the oil and gas giants.”

Inflation is still four times higher than the BoE’s 2% target.

It has raised interest rates 12 times since December 2021 to try to address this.

In theory, the higher cost of borrowing means people will buy fewer things, especially if they have to pay more for things like mortgages, which will help prevent prices from rising quickly.

It also makes it difficult for companies to borrow money and expand.

Since March, the Bank of England has slowed the pace of rate hikes, but after Wednesday’s inflation figures, investors were betting that rates could rise another percentage point to 5.5% by the end of the year.

On Tuesday, the market expected 5.1% to be the peak.

It is not just families who are affected by the sharp rise in prices. Welsh farmer Lear Jones said the past 12 months had been “difficult” with soaring prices for feed, fertilizer, diesel and electricity.

photo caption,

There is now a glimmer of hope, said farmer Lear Jones, as the cost of fuel is starting to come down

Jones, 44, runs Derwid Farm in Corwen with 32,000 chickens and also raises cattle.

He told the BBC that Russia’s war with Ukraine had added to the pressure because he was buying feed from global markets.

But Mr Jones said there was a “slight glimmer of hope in the next few months” because the cost of fuel and diesel was starting to come down.

How can I save money at my food store?

Look through your cupboards so you know what you already have Head to the mini section first to see if it has anything you need Buy things close to the sale date which will be cheaper and use your freezer

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