Coffee and sugar drive surging food inflation
Sharp increases in the cost of coffee and sugar are behind the high rate of food inflation which is one of the drivers of the surprise inflation rise.
The cost of food increased at a rate of 4.5 per cent in the year to December, overshooting the overall inflation rate of 3.4 per cent by more than a percentage point.
Today’s Consumer Price Index (CPI) inflation figures, published by the Office for National Statistics (ONS), shocked economists who had been anticipating a rate of 3.3 per cent.
Shadow chancellor Mel Stride warned the government must get high prices under control: “Inflation is rising because of Labour’s economic mismanagement – pushing up the cost of living and punishing the most vulnerable.”
‘Sin’ goods hit hardest by price rises
The highest price growth is seen in the goods which are often targeted by so-called “sin” taxes.
The price of sugar and confectionery has spiked the most over the past year, leading food and drink inflation figures at 10.2 per cent.
The cost of coffee, tea and cocoa (9.6 per cent), butter (8.9 per cent) and meat (6.9 per cent) also soared at rates far higher than the overall cost of food and drink.
Tobacco prices also jumped – by 6.5 per cent – likely due to the increase in duty rates announced at the Budget in October.
Food inflation deals cumulative blow
While the price of food and beverages has increased by 4.5 per cent within the previous year, the overall inflation of goods in recent years is much higher and is proving costly for consumers.
After 2020, when inflation fell by 0.4 per cent, food prices have risen year-on-year in every December since, contributing to an overall rise in prices of over 25 per cent.
Harvir Dhillon, Economist at the British Retail Consortium, said these food inflation figures show that Brits are feeling the squeeze, but pointed out the sweetener offered by the falling costs of jam and honey.
Dhillon said: “[The] Government must not be complacent about inflation; if incoming regulations, such as the Employment Rights Act, increase costs further, this will be felt by consumers – not only in higher prices, but from the knock-on impact to jobs, which have already fallen significantly over the past year.”
ONS chief economist Grant Fitzner said: “Inflation ticked up a little in December, driven partly by higher tobacco prices, following recently-introduced excise duty increases.
“Rising food costs, particularly for bread and cereals, were also an upward driver.”