As inflation numbers in the UK continue to fall, the price of food items are surging. Annual CPI inflation dropped from 10.7% in November to 10.5% in December, while food and drink inflation rose from 16.4% to 16.8% in the same period.
According to the Office for National Statistics (ONS), the rate of Consumer Price Index (CPI) inflation in the United Kingdom fell fractionally from 10.7% in November to 10.5% last month. This was mainly driven by the average price of fuel coming down by £0.8 per litre month-on-month in December.
However, there was very little respite for households as food and drink inflation continues to rise. The prices for food items have gone up from 16.4% in November to 16.8% in December. Inflation in the hospitality industry has risen to 11.3% in December – marking the highest level in 30 years. Prices across restaurants and hotels are skyrocketing. A recent survey by the Food Standards Agency revealed that poorer households are buying less food and drink products due to surging prices. Some households have cut back or reduced the size of their meals as prices were getting heavy on their wallets.
Although inflation eased slightly in December, overall prices for goods and services have risen strongly the whole of last year, said Grant Fitzner, chief economist at ONS. “Prices at the pump fell notably in December, with the cost of clothing also dropping back slightly. Food costs continue to spike, with prices also rising in shops, cafes and restaurants,” added the economist.
CPI inflation has come down from the eye-watering high of 11.1% during October 2022, when soaring energy prices increased the cost of living in Britain. At the time, the government introduced support schemes to cap energy prices at £2,500 while offering grants of up to £1,200 to over 8 million households to handle the rising costs. Latest data from the ONS show annual fuel inflation has dropped sharply from 17.2% in November to 11.5% in December as a result of rigorous action by the government.
The economic crisis has led to workers unions across England, Wales and Northern Ireland to call industrial action demanding increased pay that is in line with current inflation levels. On Monday, the Royal College of Nursing (RCN) – a union representing NHS nurses, and the National Education Union (NEU) – a trade union for schools teachers, lecturers, teaching assistants and support staff, announced that they will be organising strikes on January 17 and 18 and between February 1 and 7. In December, Railway workers, ground handlers at the Heathrow Airport and Royal Mail delivery workers held strikes demanding pay rises.
The worker groups declined the government’s offer saying that it was not enough, while the government says the unions’ demands were unaffordable under current circumstances.
Chancellor Jeremy Hunt says that the government has laid out plans to halve the current inflation rate, reduce debt and grow the economy, but warned of drastic measures that will need to be taken to bring down inflation. The Bank of England (BoE), which increased interest rate on the pound sterling to 3.5% in December – largest since the 2008 financial crisis, expects further rate hikes over the course of 2023 to get inflation down to the 2% target level. In November the central bank revealed that the UK economy has entered a period of long recession that could last up until 2024.
Living costs are expected to surge once again coming spring, when the government will increase the gas and electricity price cap for Britons to £3,000. As new investment and consumer spending remain at an all-time low, and the government expected to scale back on its support for businesses from April, trade unions are concerned by the impact rising costs will have on companies across the country.