Brits to feel pinch of record food costs for months despite inflation falling

BRITS are set to feel the pinch of record food costs for a while yet — despite overall UK price inflation falling last month.

It eased to 10.1 per cent in January from 10.5 per cent in December — the third month in a row it has gone down.

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This is encouraging as it tallies with the Bank of England’s suggestion we might now be over the worst of price rises.

Inflation largely fell due to the falling price of petrol and takeaways, and restaurants and hotels cutting their prices in the traditionally quiet month of January.

However, while the drop in inflation is bigger than some economists had expected, life still won’t feel much easier for many.

Inflation remains five times as high as the Bank of England thinks appropriate for a healthy economy.

And it is even worse for consumers because the highest price rises have been unavoidable and the cost of food is at record levels.

Grocery prices rose 16.7 per cent in January — a 45-year high according to the Office for National Statistics.

Everyday staples, such as bread and pasta, are a fifth more expensive than a year ago.

Eggs are 28.8 per cent dearer as supermarkets had to pay farmers more amid a supplier crisis.

Olive oil remains one of the biggest jumps with prices 44.6 per cent higher than a year ago, while sugar is 40.9 per cent higher. Beer is also 9.70 per cent up.

Laura Suter at AJ Bell said: “Small tweaks down in prices in some areas don’t stop the fact that many people are still seeing bills rise, with energy and food costs still increasing.”

Falling commodity and shipping costs should mean the rate of price rises slows but food manufacturers say it is unlikely prices will actually decrease for a long time.

There is also a lag between when food producers face higher costs and their products hit the shelves, meaning shoppers will have to keep paying more even after commodity costs start falling.

MINER’S RECORD PROFITS

HIGH energy prices are lining the pockets of Glencore’s commodity traders, with the company announcing a trebling of profits.

The coal miner and trader reported record profits of £28.2billion for last year.

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More than half of its core profits came from booming coal production as more countries ditch their green pledges for energy security reasons.

Gary Nagle, Glencore’s chief executive, said the profits were driven by “vulnerabilities in energy security and supply chains”.

The volatility in energy markets has been a boon for Glencore’s trading arm, which sells commodities to the highest bidder.

It is rewarding shareholders with £5.8billion in dividends and buybacks.

While oil and gas explorers have been hit with windfall taxes, traders have profited from the energy crisis but faced no further penalties.

NO FLYBE RESCUE

BUST carrier Flybe is to be grounded for ever after efforts to sell it failed.

The airline collapsed last month after falling insolvent for the second time in three years.

Administrators at Interpath said despite talks with some “credible parties” it had not been possible to strike a deal in time, owing to challenges relating to Flybe’s airport landing slots and licences.

The airline will now be wound down and sold off in chunks.

BAD NEWS BANK

SHARES in Barclays fell almost 10 per cent yesterday after it recorded a bigger-than-expected 14 per cent slip in pre-tax profits to £7billion.

A dealmaking drought hit fee income in the investment bank division as financial advisers had a quiet year.

And the bank’s high street arm underwhelmed investors after not making as much income as predicted from higher interest rates.

Barclays has put aside £1.2billion to cover a potential rise in customers falling behind on debt payments.

HEINZ HALT HIKES

THE maker of Heinz baked beans and tomato ketchup said it would stop hiking prices as shoppers were increasingly switching to cheaper alternatives.

US food giant Kraft Heinz said yesterday its profits would suffer as it would have to absorb more of the higher costs from rising dairy, soy and packaging prices.

Boss Miguel Patricio said that consumers were “paying more attention to the price tag”.

The cost of living crisis has prompted more shoppers to switch to cheaper own-brands.

DUNELM’S EGGED ON

THE boss of Dunelm said shoppers are still flocking to its shops for gifts, decorations and Easter egg hunt items because they were looking forward “to a bit of fun after it’s been so grim”.

The homewares retailer has continued to grow sales by 5 per cent as savvy Brits have stocked up on thicker duvets, thermal curtains, hot water bottles and indoor clothes airers to cut down energy bills.

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Dunelm said half-year profits had dipped by 16.6 per cent to £117.4million in the six months to end of December as it faced higher costs.

But despite the challenging backdrop, it still expects to hit forecasts.

Nick Wilkinson, chief exec, said: “There are still tough times ahead, but it’s not looking like it was a year ago.”

This post first appeared on thesun.co.uk