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WhatsNew2Day > News > Inflation posts a surprising increase to 10.4% driven by rising food and beverage costs
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Inflation posts a surprising increase to 10.4% driven by rising food and beverage costs

Last updated: 2023/03/22 at 4:06 AM
Jacky 2 days ago
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The headline CPI rate was expected to fall to a single figure, but surprised analysts by rising to 10.4% from 10.1% in the year to February.
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Inflation posted a surprising rise today driven by rising food and drink costs, increasing pressure on the Bank of England to raise interest rates tomorrow.

The headline CPI rate was expected to fall to a single figure, but surprised analysts by rising to 10.4% from 10.1% in the year to February.

The move sends a wrecking ball through hopes that Threadneedle Street could delay the base rate hike, following turmoil in markets from the collapse of Silicon Valley Bank and Credit Suisse. The pound immediately rose against the US dollar as traders reversed their position on the prospects for a rise.

Foreign Minister Jeremy Hunt warned that falls in inflation are not “inevitable”, despite the fact that the Office for Budgetary Responsibility and the BoE have forecast sharp increases in the coming months.

Worryingly, while previous CPI rallies have been driven by energy costs, the Office for National Statistics noted rising prices in pubs and restaurants, as well as basic food and drink items.

Most economists expected the CPI to fall to 9.9 percent in February.

Food and non-alcoholic beverage prices rose 18.2 percent in the year through February, up from 16.8 percent in January, with that annual rate now at its highest level since 1977.

Shortages of vegetables such as tomatoes and peppers in recent weeks, which saw some supermarkets rationed, were largely behind the alarming spike.

The headline CPI rate was expected to fall to a single figure, but surprised analysts by rising to 10.4% from 10.1% in the year to February.

The pound immediately rose against the US dollar as traders reversed their position on the prospects for an interest rate hike tomorrow.

Separate investigation of Which?  has analyzed the essential items most affected by the increase in prices

Separate investigation of Which? has analyzed the essential items most affected by the increase in prices

Hunt said: ‘The fall in inflation is not inevitable, so we must stick to our plan to halve it this year.

“We recognize how difficult things are for families across the country, so as we work to control inflation, we will help families with cost of living support worth an average of £3,300 per household this year.” .

Laying out the reasons for the surprise upward move, ONS Chief Economist Grant Fitzner said: “Inflation rose in February, mainly driven by higher pub and restaurant alcohol prices following discounts in January.

READ MORE: How some shopping essentials ‘doubled in price’ over a year

It has been revealed that thousands of shopping cart essentials have skyrocketed in price, with some products doubling in just one year.

The cost of budget items, which many have turned to in the cost of living crisis, is shown to be the fastest rising, analysis of more than 25,000 products shows.

Research for which? found that the annual inflation rate for prices of popular foods and beverages in February was 16.5 percent at eight large supermarkets.

On average, economy range prices increased by 22.9%, while private label prices increased by 19.7%. Supermarket premium lines increased 13.8% and large brands 13.3%.

‘Prices of food and non-alcoholic beverages rose at their highest rate in more than 45 years, with particular increases for some salads and vegetables, as high energy costs and bad weather in parts of Europe led to shortages and rationing.

“These were partially offset by declines in the cost of motor fuel, where the annual inflation rate has moderated for seven consecutive months.”

While economists expect prices to fall rapidly later this year, inflation remains more than five times the Bank of England’s 2 percent target.

The central bank will weigh the need to control inflation against concerns about the consequences of global banking problems when deciding whether to raise interest rates tomorrow.

The BoE has approved ten consecutive rate hikes since December 2021, raising its key bank rate to 4 percent.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “There is no letup in punishing inflation for consumers and businesses as prices rose further in February.”

‘Hopes were high that he had finally pulled back from his double-digit heights, making a march down, but he headed back to the top.

“As restaurants and hotels raise prices in the face of high food and labor costs, this translates to unpleasant increases for customers.

“Shoppers are also struggling with higher food and clothing prices, and cost-of-living headwinds show little sign of abating.

“It had been a bit tricky if the Bank of England were to raise rates, but now that consumer price inflation has risen to 10.4 percent for the month, it looks increasingly likely that an increase will be approved tomorrow.”

“While banking turbulence will be on the mind, this latest outlook and ongoing concerns about a tight labor market are likely to tip the balance in favor of a rate hike.”

Shadow Chancellor Rachel Reeves said: “The reality is that under this Tory government, families feel worse and nothing works better than 13 years ago.”

‘The cost of living crisis is still going strong and taxes are rising, but the government chose to use the budget to deliver a £1 billion cap to the richest 1 per cent.

‘Workers will support workers and with our mission to ensure the highest sustained growth in the G7, make families in every part of our country feel better.’

Alpesh Paleja, the chief economist at the Confederation of British Industry, said that “although inflation rose in February, the outlook for the coming months looks more benign.”

“But while we expect inflation to ease later this year, the steadiness of domestic price pressures is something the Bank of England will be watching closely.

“And despite further declines in the coming months, this year will continue to be a high-inflation environment for both households and businesses.”

It comes as what? He revealed that thousands of shopping cart essentials have skyrocketed in price, with some products doubling in just one year.

The cost of budget items, which many have turned to in the cost of living crisis, is shown to be the fastest rising, analysis of more than 25,000 products shows.

Research by the consumer group found that the annual inflation rate for prices of popular foods and beverages in February was 16.5 percent at eight large supermarkets.

On average, economy range prices increased by 22.9%, while private label prices increased by 19.7%. Supermarket premium lines increased 13.8% and large brands 13.3%.

They are adding hundreds of pounds to annual food bills and are well ahead of wage, pension and benefit increases.

The tracker shows prices rose 24.4% at Lidl, compared with 22.7% at Aldi, 17% at Asda, 16.7% at Morrisons, 14.2% at Waitrose, 14 .1% at Sainsbury’s, 14% at Tesco and 10.3% at Ocado.

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TAGGED: beverage, costs, dailymail, driven, food, increase, Inflation, Latest news, news, posts, rising, Surprising
Jacky March 22, 2023
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