UK inflation hits 40-year high as food prices peak

LONDON, Oct 19, (AP): British food prices rose at the fastest pace since 1980 last month, driving inflation back to a 40-year high and heaping pressure on the embattled government to balance the books without gutting help for the nation’s poorest residents.

Food prices jumped 14.6% in the year through September, led by the soaring cost of staples such as meat, bread, milk and eggs, the Office for National Statistics said Wednesday. That pushed consumer price inflation back to 10.1%, the highest since early 1982 and equal to the level last reached in July.

The figures immediately fueled demands that the government do more to help families and retirees as it struggles to regain credibility after an ill-fated package of tax cuts roiled financial markets. Treasury chief Jeremy Hunt ditched the package after he took office last week, but he has warned that this will be a difficult winter and spending reductions also will be needed.

Glenn Sanderson, head teacher at St. Aidan’s Catholic Academy in Sunderland, said schools across the country are finding it difficult to feed needy children, with many diverting money from textbooks and classroom teaching to subsidize meal programs. The suggestion of government budget cuts in this environment is “appalling,” he said.

“Parents … are having to make difficult decisions - do they pay the bus fare to send their child to education or do they use that money to feed their child?” Sanderson told the BBC. “In today’s society, I find that completely unacceptable.”

Hunt this week told the House of Commons that the government would “prioritize help for the most vulnerable while delivering wider economic stability.”

Increase pensions

Prime Minister Liz Truss reinforced that point during the weekly prime minister’s questions session Wednesday, repeating a previous commitment to increase pensions in line with inflation. She didn’t make a similar promise on benefits but hinted they would.

Russia’s invasion of Ukraine has boosted food and energy prices worldwide, with shipments of natural gas, grains and cooking oil disrupted. That added to price rises that began last year as the global economy started to recover from the COVID-19 pandemic.

While the jump in food costs took the biggest bite out out of household budgets in Britain last month, prices are rising across the board. Transportation costs jumped 10.9%, furniture and households goods rose 10.8%, and clothing was up 8.4%. Housing costs rose 9.3%, driven by the rising price of energy.

The government has sought to shield consumers from the impact of rising energy prices by capping the cost of electricity and natural gas. But Hunt has now limited the price cap to six months, instead of the two years originally promised.

That means inflation is likely to stay higher for longer than previously forecast, said Jack Leslie, senior economist at the Resolution Foundation, a think tank that focuses on improving living standards for low- and middle-income people.

“This bleak outlook means that family incomes will continue to fall sharply again next year, especially as support with energy bills is withdrawn,” Leslie said in a statement. “That is the context of debates within government about whether previous commitments to uprate benefits or pensions in line with prices should be the next U-turn to be announced.”

Oil

In energy markets, benchmark U.S. crude gained $1.30 to $84.12 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oil trading, picked up 92 cents to $90.95 per barrel in London.

Currencies

The dollar rose to 149.62 yen from Tuesday’s 149.21 yen. The euro declined to 97.82 cents from 98.50 cents.