Myron Jobson, senior personal finance analyst at interactive investor, comments on inflation.
Commenting on an article published by the Office for National Statistics (ONS) today comparing changes in inflation across the G7, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Britain appears to be an outlier among the G7 economies when it comes to food and energy inflation. Energy price inflation in the UK was the highest among G7 economies over 12 months to March 2023, and the UK food price inflation was second only to Germany.
“Since Russia’s devastating invasion of Ukraine, the effects of energy and commodities supply disruptions has cascaded across key household expenses from food to domestic energy bills. The sharp increase in energy prices is one of the biggest contributors of soaring food costs, given the impact on energy from the cost of keeping food factory production lines rolling, storing the produce and shipping. When it comes to food, shortages have driving recent rises in cost for customers. Earlier in the year, salad and vegetables were in short supply largely due to extreme weather hitting harvests in Spain and North Africa.
“But not all the inflationary pressure in the UK is a result of global events. The tight labour market has led to higher wages to attract and retain employees, which tends to lead to higher costs put on the customer.
“The kind of food and energy price inflation the UK has experienced over the past year has the worst effect on the most vulnerable in society, with rising prices having a greater impact on those on lower incomes. Tomorrow’s inflation figures are expecting to show that while price increases are cooling, they still remain uncomfortably high. Many of us will remain in budgeting mode as heightened costs continue to weigh on household budgets.
Kantar food price inflation
Myron Jobson says: “It’s comforting that headline food inflation is coming down, but we’re not out of the woods yet. We are still paying a lot more to put food on tables than last year. The soaring cost of food brought about a stark shift in shopping behaviours. Baskets have gotten smaller and more of us are ditching premium brands for cheaper alternatives.
“Customers are also increasingly taking a stand against what they deem as unfair prices amid fears that food retailers and producers are profiteering from rising prices. We’ve already seen a large number of shoppers jumping ship to German discount retailers to lower the cost of the grocery shop.
“Food prices remain uncomfortably high for many, especially for those on a low income, who spend a greater share of their money on food. With many of us opting against receiving receipts at self-checkouts, it is difficult to keep track of price rises – and supermarkets aren’t likely to shout about upping prices. As such, it remains important to actively review your budget and make necessary changes to maintain financial resilience.”
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