Official figures from the Office for National Statistics (ONS) show inflation in the food and non-alcoholic beverages market held relatively steady last month, despite a spike in the wider figure.
Prices of food & drink rose by 1.9% in the year to October, edging up from 1.8% in September. This compares to 10.1% in the same period last year.
Vegetables (including potatoes) were the only one of the 11 food and non-alcoholic beverage classes to see an upward contribution to the change in the annual rate between September and October. The upward contribution occurred because prices rose between September and October this year but fell between the same two months last year.
The ONS noted that seven classes were little changed, and there were downward contributions from the other three classes because prices fell between September and October this year but rose between the same two months last year. The downward contributions came from fish, oils and fats, and coffee, tea and cocoa.
Meanwhile, the overall inflation rate for the UK rose to its highest figure for six months. The Consumer Prices Index (CPI) came in at 2.3% for October, up from 1.7% in September, driven mainly by a rise in energy bills.
Fiona Cincotta, a financial market analyst, pointed out that the “hotter” than expected inflation rate comes after the Bank of England has “already warned that rates may be cut at a slower pace”.
Andrew Bailey, the Bank’s governor, reiterated on Tuesday that it would take a “gradual” approach to cutting interest rates after warnings that Budget tax rises and the threat of Trump tariffs could drive prices up at a faster rate.
Russ Mould, investment director at AJ Bell, said policymakers could argue inflation at 2.3% is still “relatively low”, but he added households were still feeling the impact of price rises over the last few years.
NAM Implications:
- Unfortunately, shoppers in the aisle have outgoings other than food & drink.
- So a slight easing of food & drink inflation will not distract them from concerns re other household and living expenses.
- Or yet-to-be-experienced Budget impacts.
- Or ‘rises’ in the pipeline.
- In other words, suppliers & retailers had best not anticipate the universal opening of purses anytime soon, realistically speaking…
