New data shows prices in UK stores rising at a record pace

2023-06-01 16:43:19
New data shows prices in UK stores rising at a record pace

New data shows prices in UK stores are rising at a record pace, the latest sign of a seemingly intractable cost-of-living crisis that has Prime Minster Rishi Sunak considering drastic measures.

Those measures by Sunak include price controls to keep inflation in check, CNN reported.

The cost of store items, known as shop price inflation, rose 9% through the year to May, a fresh high for an index that dates back to 2005, according to the British Retail Consortium.

Food inflation dipped slightly to 15.4% in May, but that’s still the second-highest rate on record.

Lower energy and commodity costs helped reduce prices of some staples, including butter, milk, fruit and fish. But chocolate and coffee prices are rising as global commodity prices soar, British Retail Consortium CEO Helen Dickinson said.

The slight drop in food prices will give cold comfort to consumers, and piles the pressure on Sunak, who has promised to halve inflation this year as one of his five pledges to voters.

The British public “are still wincing when their total comes up at the checkout… a weekly shop that cost £100 last year is now clocking in at £115,” Laura Suter, head of personal finance at stockbroker AJ Bell wrote in a note.

Poor households are being hit the hardest because they spend more of their disposable income on food. More people are using food banks in the United Kingdom than ever before, eclipsing even the peak of the pandemic.

The Trussell Trust, the UK’s biggest food bank network, handed out close to 3 million emergency food parcels over the 12 months to March 2023 — a 37% increase on the previous year.

Even the Bank of England, tasked with keeping inflation at 2%, has been caught off guard by stubbornly high food prices, which seem to have barely responded to 12 successive interest rate hikes.

Food prices have contributed to keeping inflation “higher than we expected it to be,” Bank of England Governor Andrew Bailey told a Treasury committee hearing last week. “We have a lot to learn about operating monetary policy in a world of big shocks,” he admitted.


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