Oil prices fall on ceasefire extension but stay near $100 a barrel as strait of Hormuz remains closed
Peter Dixon, senior economist at the National Institute of Economic and Social Research, a respected think tank, said:
While inflation may fall back in April due to base year effects, it will climb further in the course of 2026, remaining well above the Bank of England’s target.
The monetary policy committee’s dilemma in the coming months is whether it should look through what may only be a temporary rise in inflation, or whether it will need to tighten policy to tackle second round effects [on wages].
Prices rose the fastest for beef and veal (18.8%), whole milk (12.7%) and confectionary products (11.1%).
Prices fell for nine categories, with the largest drops for: flours (-6.8%), olive oil (-6.2%), and pizza (-2.6%).
It will take 7-12 months for cost pressures on manufacturers to feed through to consumers
The clouds are gathering, but the storm has not yet broken on rising food and drink inflation. The war in Iran has delivered a cost shock that is already too large for manufacturers to absorb in full. The impact on prices will take time to work its way through the system, but it’s only a matter of time before it does. For manufacturers, long-term contracts with suppliers and retailers mean it can take up to a year for higher costs to be fully passed through. But where products are less processed, or supply chains are shorter, prices will move more quickly. As a result, absent of any government intervention, we expect a gradual but persistent pickup in food inflation, reaching around 9%–10% by the end of the year.
This means we’re in a crucial window for action to limit the impact on shoppers. We’re working with government to look at the levers they can pull now to support food manufacturers now to soften the blow on consumers later in the year.
Continue reading…Oil prices fall on ceasefire extension but stay near $100 a barrel as strait of Hormuz remains closedPeter Dixon, senior economist at the National Institute of Economic and Social Research, a respected think tank, said:While inflation may fall back in April due to base year effects, it will climb further in the course of 2026, remaining well above the Bank of England’s target.The monetary policy committee’s dilemma in the coming months is whether it should look through what may only be a temporary rise in inflation, or whether it will need to tighten policy to tackle second round effects [on wages].Prices rose the fastest for beef and veal (18.8%), whole milk (12.7%) and confectionary products (11.1%).Prices fell for nine categories, with the largest drops for: flours (-6.8%), olive oil (-6.2%), and pizza (-2.6%).It will take 7-12 months for cost pressures on manufacturers to feed through to consumersThe clouds are gathering, but the storm has not yet broken on rising food and drink inflation. The war in Iran has delivered a cost shock that is already too large for manufacturers to absorb in full. The impact on prices will take time to work its way through the system, but it’s only a matter of time before it does. For manufacturers, long-term contracts with suppliers and retailers mean it can take up to a year for higher costs to be fully passed through. But where products are less processed, or supply chains are shorter, prices will move more quickly. As a result, absent of any government intervention, we expect a gradual but persistent pickup in food inflation, reaching around 9%–10% by the end of the year.This means we’re in a crucial window for action to limit the impact on shoppers. We’re working with government to look at the levers they can pull now to support food manufacturers now to soften the blow on consumers later in the year. Continue reading…
