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Friday, March 31, 2023

UK food prices rise at fastest rate in 45 years

Food prices are rising at their fastest rate for 45 years, with the cost of basics such as milk, cheese and eggs all surging, latest figures show

Food price inflation hit 16.2% in the year to October, up from 14.5% in September.

Energy and fuel costs also rose, helping push the overall UK inflation rate to a 41-year high.

High prices are hitting poorer people hardest, as they spend more of their income on food and energy.

The latest overall inflation figure, which is 11.1%, is the highest since October 1981 and comes ahead of Thursday’s Autumn Statement, which is expected to see Chancellor Jeremy Hunt announce public spending cuts and tax rises.

Mr Hunt said his plans will aim to bring spiralling price rises under control, adding that he would take “tough but necessary decisions” to get the economy back on track.

Inflation is a measure of the cost of living and to calculate it, the Office for National Statistics (ONS) keeps track of the prices of hundreds of everyday items, known as a “basket of goods”.

Items such as milk, pasta, margarine, eggs and cereals were among the food items that saw the sharpest price rises in October, it said.

Meanwhile it said that over the past year “gas prices have climbed nearly 130%, while electricity has risen by around 66%”.

Higher costs affect businesses as well as households, and rising energy bills have forced some firms to put up their prices.

This has led to households cutting back their spending, which is dragging on the economy and causing it to shrink. It means the UK is likely to enter into an economic recession at the end of the year.

Latest figures showed the economy contracted by 0.2% between July and September and the Bank of England has warned the UK is facing a tough two-year downturn.

A recession is defined as when an economy shrinks for two three-month periods in a row. It’s a sign an economy is performing badly, with companies often making less money and unemployment rising.

To stem the speed of rising prices, the Bank of England has increased interest rates to 3%, which makes borrowing money more expensive.

Some economists have suggested October’s 11.1% inflation rate could be the peak, with Paul Dales, chief UK economist at Capital Economics, saying prices could began to slow down “if the government continues to freeze [energy] prices in some way”.

“There is growing evidence that the upward pressure on core inflation from global factors is now fading,” he said.

“The recent falls in global agricultural commodity prices suggest to us that food inflation will soon start to ease.”

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