UK food inflation continued to rise in December, according to new sector data that point to “another difficult year for consumers and businesses”.
Annual growth of UK food prices hit 13.3 per cent in December, the British Retail Consortium said on Wednesday. That was up from 12.4 per cent in November, and the highest reading since the trade body’s records began in 2005.
Overall shop price inflation edged down to 7.3 per cent in December from a record 7.4 per cent the previous month.
The figures suggest that households will continue to feel a sharp squeeze even as overall inflation levels are expected to ease this year from multi-decade highs reached in 2022.
They also suggest that the 16.6 per cent rate of food inflation — a 45-year high — reported by the Office for National Statistics for November might accelerate when the body publishes December figures later this month.
Responding to Wednesday’s data, BRC chief executive Helen Dickinson said: “2023 will be another difficult year for consumers and businesses as inflation shows no immediate signs of waning.”
She added that the prices of many essential foodstuffs were rising as Russia’s war in Ukraine continued to push up the costs of animal feed, fertiliser and energy.
This is despite some economists suggesting that the surge in overall annual price levels has passed its peak. The ONS last month found UK inflation had dipped from its 41-year high of 11.1 per cent in October to 10.7 per cent in November.
In the Financial Times’ annual survey of leading UK-based economists, DeAnne Julius, distinguished fellow at the think-tank Chatham House, said that “if energy prices do not spike higher due to further Russian action, then inflation will fall steadily” this year.
The BRC’s data is in line with forecasts by the Office for Budget Responsibility, the fiscal watchdog, which said in November that food price pressures might linger in 2023 even as overall inflation levels began to ease from the first quarter.
Mike Watkins, head of retailer and business insight at the consultancy NielsenIQ, said the rise in food inflation would “put further pressure on household budgets”, making it “unlikely that there will be any improvement in the consumer mindset” in the near term.
A separate ONS survey published last month found that, in the first half of December, 45 per cent of Britons had to cut back on food shopping and essentials because of the surge in living costs. Rising prices of essentials have the greatest impact on the poorest households, because they spend on average a larger proportion of their finances on food.
Meanwhile, a report published on Wednesday by the Resolution Foundation highlighted that people with disabilities, who account for one-third of the poorest households in Britain, were “hugely exposed” to the cost of living crisis.
The think-tank found that people with a disability were almost three times as likely to live in material deprivation as the rest of the population. It added that 31 per cent of people with a disability had had to reduce their spending on food this winter, compared with 18 per cent of the non-disabled population.
Charlie McCurdy, co-author of the report, said that “while fast-rising prices for essentials is impacting people across the UK, people with disabilities are more exposed to the most severe effects”.
Source: Economy - ft.com
