Inflation rises more than expected as meat, bread and cereals become more expensive
Janet Mui, head of market analysis at the wealth manager RBC Brewin Dolphin, noted that the Bank of England had factored in higher inflation, and that weak price pressures in areas like clothing and household goods could be symptoms of cautious discretionary spending.
Today’s inflation data and yesterday’s wage data highlight the persistence of price pressures in the UK. The Bank of England has already pencilled in a reacceleration in inflation this year, so this should not come as a surprise to policymakers. At the margin, it is a reminder for the Bank to proceed with caution in terms of rate cuts…
It is hard to justify a rate cut in March when services CPI is 5% and wage growth is 6% year on year, while GDP and employment data have been better than thought as of late. The policy direction will be driven by the Monetary Policy Committee’s judgement between averting growth risks versus containing inflation.
Whilst food and drink manufacturers continue to work hard to keep costs down for consumers, we saw food and drink price inflation surge to 3.3% in the first month of 2025, up from 2.0% in December 2024. Rising energy and water bills as well as higher commodity prices, like dairy and cocoa, are all having an impact on production costs.
Unfortunately, this month isn’t likely to be a flash in the pan for rising food and drink prices. We’re yet to see the full impact of increasing labour costs, with changes to both National Minimum Wage and National Insurance Contributions coming into force in April, and we expect to see this filter through to shoppers over the coming year. We urge government to work with industry to simplify regulation and bring business costs down to help protect consumers from rising prices.
Continue reading…Inflation rises more than expected as meat, bread and cereals become more expensiveJanet Mui, head of market analysis at the wealth manager RBC Brewin Dolphin, noted that the Bank of England had factored in higher inflation, and that weak price pressures in areas like clothing and household goods could be symptoms of cautious discretionary spending.Today’s inflation data and yesterday’s wage data highlight the persistence of price pressures in the UK. The Bank of England has already pencilled in a reacceleration in inflation this year, so this should not come as a surprise to policymakers. At the margin, it is a reminder for the Bank to proceed with caution in terms of rate cuts…It is hard to justify a rate cut in March when services CPI is 5% and wage growth is 6% year on year, while GDP and employment data have been better than thought as of late. The policy direction will be driven by the Monetary Policy Committee’s judgement between averting growth risks versus containing inflation.Whilst food and drink manufacturers continue to work hard to keep costs down for consumers, we saw food and drink price inflation surge to 3.3% in the first month of 2025, up from 2.0% in December 2024. Rising energy and water bills as well as higher commodity prices, like dairy and cocoa, are all having an impact on production costs.Unfortunately, this month isn’t likely to be a flash in the pan for rising food and drink prices. We’re yet to see the full impact of increasing labour costs, with changes to both National Minimum Wage and National Insurance Contributions coming into force in April, and we expect to see this filter through to shoppers over the coming year. We urge government to work with industry to simplify regulation and bring business costs down to help protect consumers from rising prices. Continue reading…
