Inflation: Food prices in the UK are rising at the fastest rate in 42 years, as the cost of living crisis continues to pressure household finances. Prices for bread, cereals, meat, and dairy products all jumped 14.5% in the year to September, the highest increase since 1980.
It comes as people’s energy and transportation costs continue to rise. In the United Kingdom, overall inflation hit 10.1% last month and is expected to rise further. According to the Office for National Statistics (ONS), the prices of the majority of basic products in the average household’s food shopping basket rose last month, including fish, sugar, fruit, and rice.
Experts believe that the rise in grocery costs has been exacerbated by the situation in Ukraine, which has disrupted grain, oil, and fertilizer supplies from the region. The recent depreciation of the pound has also had an effect on food and beverage prices, raising the cost of imported items and ingredients.
“Food and drink manufacturers continue to do everything in their power to keep product prices low,” Karen Betts, CEO of the Food and Drink Federation, stated. “However, due to significant increases in ingredient, raw material, energy, and other costs, companies are forced to pass certain price increases on.”
According to the ONS, overall inflation has returned to the 40-year high attained in July, after dropping to 9.9% in August. It also noted that the cost of furniture and hotel stays had increased, but that this was partially offset by decreasing gasoline and airline ticket prices.
After accounting for the significant increase in energy costs at the start of this month, the Bank of England anticipates that inflation will peak at 11% in October.
Jen Welch, owner of the artisan bakery Bread&, described the situation as “hazardous,” citing her continually rising prices. During the outbreak, she opened a bakery in Sunderland, expecting it to be the most painful experience of her life.
However, the cost of her basic supplies, such as flour, butter, and oils, has “spiraled out of control,” and they now spend more than £1000 per month on electricity. “You think to yourself, if we can survive the plague, we can withstand most storms,” she said, according to the sources. “However, that is not guaranteed.”
The most recent official figures come as incoming Chancellor Jeremy Hunt works to address rising living costs as well as recent financial market instability triggered by his predecessor’s mini-budget. As a result of the volatility, mortgage prices have reached a 14-year high, raising costs for millions at a time when energy and food bills are also rising.
Mr. Hunt remarked that the government recognizes that people are suffering and that it will “prioritize support for the most vulnerable while delivering wider economic stability.”. “This morning’s inflation figures will add to people’s fears about the Tories’ inability to grasp an economic catastrophe they created,” said shadow chancellor Rachel Reeves.
Experts predict that the new inflation figures will increase pressure on the Bank of England to hike interest rates at its next meeting in November.
The Bank thinks that raising interest rates will encourage consumers to save more and spend less, slowing the rate at which prices rise. It has hiked rates seven times in a row since December in an attempt to return inflation to its 2% target. Higher interest rates, on the other hand, increase the cost of borrowing for households and companies, and experts worry that this could hamper economic growth.
As pricing pressures continued to harm UK families, the Bank was “between a rock and a hard place,” according to Victoria Scholar, head of investment at Interactive Investor.
The administration has been shaken by market volatility in the context of a budget that promised unfunded tax cuts. The majority of the laws were ultimately revoked, leaving Prime Minister Liz Truss in a difficult position. Truss removed Hunt’s predecessor, Kwasi Kwarteng, after less than six weeks on the job, citing overwhelming budget criticism.
Analysts predict Wednesday’s announcement will put substantial pressure on the Bank of England to keep raising its benchmark interest rate. The Bank of England may hike interest rates by up to one percentage point to 3.25 percent at its next meeting in November, according to Capital Economics.
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