Inflation drops to 10.1%, but food costs at 45-year high
19th April 2023 08:36
by Alice Guy from interactive investor
Food inflation is up from 18.0% in February to 19.1% in March this year.
Alice Guy, Head of Pensions and Savings at interactive investor says: “Today’s news that inflation dropped from 10.4% to 10.1% in March shows light on the horizon for households, but it’s a faint glimmer rather than the full sun.
“The figures offer cold comfort to families who are facing the highest food inflation for 45 years, up from 18.0% in February to 19.1% in March this year. High food inflation is especially painful for poorer households who spend a bigger proportion of their income on food.
“Overall, the slight drop in inflation is largely due to falling prices at the pumps, partially offset by rises in food and recreation costs.
“Kantar figures on shopping trends reveal that British shoppers are tightening the purse strings and changing their shopping habits, opting for cheaper frozen rather than fresh food to dampen the fire of sizzling inflation on their household budget.
“Costs are rising much faster than wages, leaving an increasing hole in household budgets. Average wage inflation was only 5.9% in February compared to 10.1% inflation meaning that households need to somehow find more and more cash from a pot that’s diminishing in real terms.
“Inflation has fallen partly because it’s an annual figure and we’re now coming round to the period when inflation was high last year. The two-year inflation figure is 17.8%, while average wage inflation over the last two years combined was only 11.6% in total.”
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