Food and drink prices soared last month at the fastest rate for 45 years despite slowing inflation rate in the UK, latest official figures show.
According to the Office for National Statistics (ONS), food prices increased by 19.1 percent in March year-on-year, the sharpest jump since August 1977.
The prices of bread, cereals, and fruit all increased, while the impact of vegetable shortages continued to weigh on inflation.
This is despite the fact that Consumer Prices Index (CPI) inflation fell to 10.1 percent in March from 10.4 percent in February.
The drop in inflation was largely driven by lower fuel costs, with petrol and diesel costs down 5.9 percent against the same month last year after prices had spiked following Russia’s invasion of Ukraine.
Meanwhile, clothing and footwear prices rose by 7.2 percent year on year, although this represented a slight slowdown against February’s data.
Restaurant and hotel prices also continued to rise, at 11.3 percent, but also saw inflation cool from the previous month.
ONS chief economist Grant Fitzner said: “Inflation eased slightly in March, but remains at a high level.
“The main drivers of the decline were motor fuel prices and heating oil costs, both of which fell after sharp rises at the same time last year.
Stubborn Inflation
Economists had previously forecast inflation would be 9.8 percent for the month.There had been expectations that stubborn inflation will drop more sharply from April amid a decline in energy prices.
The UK fiscal watchdog, the Office for Budget Responsibility (OBR), last month cut its forecasts for inflation, predicting CPI would end the year at around 2.9 percent.
Kitty Ussher, chief economist at the Institute of Directors, said: “Business remains extremely concerned by the rate of inflation and wants to see it under control.
“While it is a relief that the headline rate of inflation is now pointing downwards again, following the surprise rise last month, the Bank of England’s job is not yet done.”
Martin Beck, chief economic adviser to the EY Item Club, said: “The club still thinks headline inflation will fall at pace this year, mainly reflecting strong base effects and falling wholesale energy prices, which should feed through into lower household bills from the summer.
“Less expensive energy will likely directly lower inflation, and by reducing businesses’ costs, should indirectly bear down on core and services inflation.
“However, the recent persistence of underlying price pressures poses a risk to just how quickly inflation will fall.”
Commenting on the latest inflation figures, Chancellor Jeremy Hunt said: “These figures reaffirm exactly why we must continue with our efforts to drive down inflation so we can ease pressure on families and businesses.
Pressure on Households
The continuing rise in food prices is putting increased pressure on British households.According to Which?, a UK consumer group, overall inflation on food and drink at supermarkets continued to rise in March to 17.2 percent, up from 16.5 percent the month before.
Cheddar cheese prices increased by an average 28.3 percent across eight major supermarkets, compared to a year ago.
The cost of porridge oats went up by an average of 35.5 percent, and large 800g loaves of sliced white bread saw an average increase of 22.8 percent.
Supermarket own-label budget items—which are still the cheapest overall—were up 24.8 percent in March compared with the same time last year, higher than the 20.5 percent increase seen on standard supermarket own brands and the 13.8 percent on branded and premium own-brand ranges.
The consumer group warned that even value foods, despite remaining a cheaper option, are at risk of becoming too expensive for those on the tightest budgets.
According to research firm Kantar, hard-pressed shoppers are now opting for frozen meat and meals like pizza and chips.
Sales of frozen poultry like chicken and game meats as well as frozen prepared foods increased in the three months to mid-March, compared with the same period last year.
Meanwhile, total grocery sales declined over the same period.
Myron Jobson, senior personal finance analyst at Interactive Investor, said: “Shoppers are increasingly opting to buy frozen instead of fresh as part of efforts to quell the devastating impact of sizzling hot inflation on their finances.
“Choosing frozen produce also allows you to use as much or as little food without the rest of the pack going past its best, which reduces wastage and saves money.
“Baskets are getting smaller and more of us are ditching premium brands for cheaper alternatives, while many are reducing spend on nice-to-have items.”
Shoppers are switching to discounters like Aldi and Lidl, Jobson added, with both rapidly increasing their share of the market in recent months.
