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The rising value of butter, cheese and eggs has pushed UK meals inflation to a five-month excessive, in line with sector knowledge that underscores persistent value of residing pressures.
Annual meals inflation rose to 2.1 per cent in February, up from 1.6 per cent in January, marking the primary time it has gone above 2 per cent since September 2024, in line with knowledge from the British Retail Consortium.
Inflation expectations are intently tied to meals costs, according to the Financial institution of England, complicating efforts to convey general inflation again to its 2 per cent goal.
The BoE expects headline inflation to rise from its present fee of three per cent to three.7 per cent by the center of this yr, earlier than returning to focus on.
Within the February financial coverage report, the BoE mentioned the latest will increase in meals value inflation have been seemingly partly to mirror will increase within the nationwide residing wage and an increase in employers’ nationwide insurance coverage contributions, which takes impact in April.
New recycling rules that come into pressure in October are additionally a consider maintaining costs excessive, in line with the BoE.
“If authorities desires to maintain inflation at bay, allow retailers to give attention to progress and assist households, it should mitigate the swath of prices going through the trade,” mentioned Helen Dickinson, chief govt of the BRC.
Dickinson expects meals inflation to surpass 4 per cent by the second half of the yr.
“Breakfast, specifically, bought costlier as butter, cheese, eggs, bread and cereals all noticed value hikes,” she added. “Climbing world espresso costs might threaten to push the morning prices greater within the coming months,” she added.
The BRC mentioned recent meals inflation rose to 1.5 per cent in February from 0.9 per cent in January. Ambient meals inflation, which incorporates packaged items, climbed to 2.8 per cent from 2.5 per cent.
Meals costs surged sharply following Russia’s invasion of Ukraine in February 2022, hitting the poorest households the toughest.
In January 2025, UK meals costs have been about 35 per cent greater than in January 2021, in line with official knowledge.
The BRC, which produces the figures with the buyer perception firm NielsenIQ, gives early indications of value pressures forward of official inflation knowledge for February printed on March 26.
Mike Watkins, head of retailer and enterprise perception at NielsenIQ, mentioned: “With many family payments rising over the following few weeks, buyers might be wanting fastidiously at their discretionary spend.
“The rise in meals inflation is prone to encourage much more buyers to hunt out the financial savings out there from grocery store loyalty schemes,” he added.
Total grocery inflation was unchanged from the earlier month — at minus 0.7 in February — as non-food costs fell by an annual fee of two.1 per cent.
Dickinson mentioned that discounting gadgets was now widespread “as retailers tried to entice prospects in opposition to a backdrop of weak demand”.
