EU food prices hit record high

FOOD, alcohol and tobacco prices in Europe soared to a record high in December, figures from Eurostat show.

The increase came even as headline inflation fell by more than expected and dropped to single digits for the first time since August.

Overall prices grew by 9.2pc in the last month of 2022, compared with a year earlier, down from 10.1pc in November.

But even as price rises slowed across the European Union, many consumer goods are still getting rapidly dearer, putting further pressure on households.

“Food inflation remains exceptionally high,” said economists Hugo Le Damany and François Cabau at AXA Investment Managers.

Average food, alcohol and tobacco prices were up by 13.6pc compared with a year ago. This is the highest rate on record, rising from 13.4pc.

However, it could yet go higher in more misery for consumers. “We continue to pencil in other rises for the beginning of this year, peaking at 15pc year-on-year in January and then remaining above 10pc until Q3 2023,” the economists warned.

In some countries such as Slovakia and Germany, food prices grew even more rapidly, at 24.1pc and 16.3pc.

Despite the better-thanexpected decline in overall inflation, analysts say it’s too early to talk about the European Central Bank taking the foot off the brake.

Core inflation, a closely watched measure that strips away volatile components such as energy and food, rose to 5.2pc – up from 5pc.

The ECB is likely to interpret this as more work to be done to rein in inflation.

Bert Colijn at ING said: “While supply-side shocks are fading, core inflation is still adjusting with a lag.”

The fall in headline inflation was driven by fast-falling gas and oil prices amid an unusually warm winter as well as energy price caps.

So returning inflation to its 2pc target “could be reached much sooner than expected”, Mr Colijn said.