UK inflation: Food prices 'worryingly high' as sugar and milk soar

Woman shopping at a supermarketImage source, Getty Images

Food prices in the UK continued to surge at the fastest rate in nearly 45 years in April, with staples like sugar, milk and pasta up sharply.

The rate at which grocery prices rose slowed marginally in the year to April, but at 19.1% is close to record highs.

It comes as the overall UK inflation rate fell sharply to hit single figures for the first time since last August.

However, it did not decline as much as expected and the chancellor said food prices remained "worryingly high".

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

The rate has shot up over the last 18 months, as food and energy prices have soared, leaving many household feeling squeezed.

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

However, it does not mean prices are coming down, only that they are rising less quickly.

Chancellor Jeremy Hunt told the BBC the sharp fall was "welcome", but admitted: "There are things underneath those numbers which show that this battle is far from over.

"We've got a long way to go."

Inflation has dropped due to the fact that energy price rises are slowing from the extreme hikes seen a year ago just after Russia, a major oil and gas producer, invaded Ukraine and was hit with sanctions.

Ukraine is also a big producer of grains and sunflowers, which are used in everything from bread to oil and animal feed. Wholesale food prices have risen because the war has disrupted Ukraine's shipments.

Extreme weather has also hit crops, including the beets used to make sugar as well as some vegetables.

However, while food price continue to rise at near-record rates, the prices of staples like bread, cereal, fish, milk and eggs are rising slightly less quickly.

"If you look at what prices businesses are facing and how much they're paying for domestic food materials, that has come down from over 15% annually last month to under 10% this month," ONS chief economist Grant Fitzner said.

The prices that companies are paying for imported foods have also fallen "considerably".

However, he said: "Of course, those aren't reflected on supermarket shelves yet."

Retailers claim that falling wholesale prices take time to filter through to supermarket shelves due to the long-term contracts they typically sign with food producers.

On Wednesday M&S boss Stuart Machin said the retailer had invested in protecting customers from the full force of inflation, which had impacted its profit margin, but said it was the right thing to do.

The regulator has opened an investigation into the pricing of food and fuel at UK supermarkets.

How are the rises in food prices affecting you? Get in touch.

Despite the fall in inflation, so-called core inflation - which strips out food and energy prices - continued to rise, sparking fears that soaring prices could persist.

How much money traders make on government bonds - essentially IOUs that can be traded in the financial markets - on Wednesday rose towards levels last seen in the turmoil after former Prime Minister Liz Truss's mini-Budget last year.

This reflected the increased likelihood of interest rate hikes, analysts said.

Inflation is higher in the UK than other advanced countries such as Germany, 7.6%, France, 6.9%, and the US, 4.9%.

Labour's shadow chancellor, Rachel Reeves, said that families would be worried that food prices and the cost of other essentials were still so high.

"They will be asking why this Tory government still refuses to properly tackle this cost of living crisis, and why they won't bring in a proper windfall tax on the enormous profits of oil and gas giants."

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Inflation is still four times higher than the Bank of England's 2% target.

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

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

It also makes it harder for firms to borrow money and expand.

Since March, the Bank of England has slowed the pace of rate rises, but following Wednesday's inflation figures, investors were betting rates could climb by a further percentage point to 5.5% by the end of the year.

On Tuesday, the market was predicting 5.1% would be the peak.

It is not just households who are being hit by surging price rises. Welsh farmer Llyr Jones said the last 12 months had been "challenging" with the price of feed, fertiliser, diesel and electricity increasing.

Image caption,

Farmer Llyr Jones said there was a glimmer of hope now that the cost of fuel was starting to fall

Mr Jones, 44, runs Derwydd Farm in Corwen and has 32,000 hens and also raises cattle.

He told the BBC that Russia's war with Ukraine has added to the pressures because he buys feed from global markets.

But Mr Jones said there was "a slight glimmer of hope for the next few months" because of the cost of fuel and diesel had started to fall.

How can I save money on my food shop?

  • Look at your cupboards so you know what you have already

  • Head to the reduced section first to see if it has anything you need

  • Buy things close to their sell-by-date which will be cheaper and use your freezer