Consumers hit as grocery prices rise
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.