Friday, March 24, 2023

Let them eat cake

Consumer prices in the UK unexpectedly surged in February, driven by soaring food and energy bills, the Office for National Statistics (ONS) reported on Wednesday.

Annual inflation as measured by the consumer prices index ran to 10.4% last month – exceeding the 9.9% consensus forecast among economists – up from 10.1% in January, placing further pressure on British households.

The ONS attributed the sharp increase to the growing cost of fresh food, non-alcoholic drinks and the rising price of restaurant meals.

“Food and non-alcoholic drink prices rose to their highest rate in over 45 years with particular increases for some salad and vegetable items as high energy costs and bad weather across parts of Europe led to shortages and rationing,” ONS chief economist Grant Fitzner said.

Overall inflation for food and non-alcoholic drinks surged to 18%, the highest level since 1977.

The surprise surge in inflation during February followed three consecutive months of slowing price increases, which gave hope that Britain was moving further away from October’s 41-year high of 11.1%.

The data comes ahead of the Bank of England’s announcement on interest rates on Thursday and is likely to add pressure on the regulator’s decision amid an unfolding upheaval in the global banking sector. The UK central bank has been increasing borrowing costs aggressively in an effort to tame inflation.

“Given the market movements of late, this puts the Bank of England in an incredibly difficult position as it may not be enough for [it] to press pause on the rate hikes,” Richard Carter, head of fixed interest research at Quilter Cheviot, told Reuters.

Households in the country continue to struggle with soaring food and energy bills, while workers across a range of sectors have launched mass strike action in recent months amid disputes over pay and conditions.


Dave C

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