Con­sumers hit as gro­cery prices rise

Yorkshire Post - - FRONT PAGE - PAUL JEEVES NEWS COR­RE­SPON­DENT ■ Email: paul.jeeves@ypn.co.uk ■ Twit­ter: @jeeves-paul

Con­sumers are fac­ing an in­creas­ing squeeze on house­hold fi­nances as gro­cery prices are ris­ing at their fastest rate in four years while in­fla­tion has re­mained at its high­est level since 2012.

CON­SUMERS ARE fac­ing an in­creas­ing squeeze on house­hold fi­nances as gro­cery prices are ris­ing at their fastest rate in four years while in­fla­tion has re­mained at its high­est level since 2012.

The rate of in­fla­tion means a typ­i­cal fam­ily could pay an ex­tra £144 a year for their gro­ceries if the pace con­tin­ues, ac­cord­ing to re­tail ex­perts at Kan­tar.

The anal­y­sis has shown that sales across the mar­ket over the 12 weeks to Novem­ber 5 were up 3.2 per cent on last year, but this was al­most all down to ris­ing in­fla­tion.

Sep­a­rate data from the Of­fice for Na­tional Statis­tics (ONS) also re­leased yes­ter­day showed the Con­sumer Prices In­dex (CPI) mea­sure of in­fla­tion was three per cent in Oc­to­ber, un­changed from a five-year high in Septem­ber.

While this means Bri­tain’s surg­ing in­fla­tion un­ex­pect­edly held steady last month, as ris­ing food prices were coun­tered by a drop in fuel costs, con­sumers are still en­dur­ing in­tense strain on bud­gets in the run-up to Christ­mas.

And econ­o­mists have backed in­fla­tion to keep ris­ing in the com­ing months, adding to the fi­nan­cial pres­sures.

Paul Dig­gle, a se­nior econ­o­mist at Aberdeen Stan­dard In­vest­ments, said: “This prob­a­bly isn’t the peak in UK in­fla­tion.

“The im­pact from last year’s cur­rency de­pre­ci­a­tion, and the lat­est move up­wards in oil prices, still have a few more months to run.

“So the Bank of Eng­land is stuck be­tween a rock and a hard place – in­fla­tion is well above tar­get but Brexit un­cer­tainty lingers and con­sumer spend­ing growth could weaken.”

Most gro­cery prod­ucts were more ex­pen­sive, with prices ris­ing fastest in cat­e­gories such as but­ter, where a milk short­age has pushed up prices, fish and cola.

Prices fell for only a few prod­uct cat­e­gories, in­clud­ing crisps and fresh poul­try.

Costs have been ris­ing since the start of the year af­ter 30 con­sec­u­tive pe­ri­ods of de­fla­tion from Septem­ber 2014 to De­cem­ber 2016 as su­per­mar­kets en­gaged in a fierce price war. Con­sumers bought 10.1 mil­lion packs of tra­di­tional Christ­mas bis­cuits in Oc­to­ber as shop­ping for the fes­tive sea­son “well and truly started”, Kan­tar said.

Prior to the pub­li­ca­tion of the ONS data, econ­o­mists had pen­cilled in a higher in­fla­tion rate of 3.1 per cent, which would have forced Bank of Eng­land Gov­er­nor Mark Carney to write a let­ter to Chan­cel­lor Philip Ham­mond ex­plain­ing why it is so high.

The Gov­ern­ment has set an in­fla­tion tar­get of two per cent, with pro­to­col dic­tat­ing that the Bank must con­tact Mr Ham­mond if the rate ex­ceeds three per cent or falls short of one per cent.

The Bank, which hiked in­ter­est rates to 0.5 per cent this month, ex­pects the CPI to peak at about 3.2 per cent in the au­tumn, adding pres­sure to house­holds grap­pling with pal­try wage growth.

The pound was 0.3 per cent lower at $1.31 and 0.6 per cent down at 1.12 euro af­ter the in­fla­tion data.

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