Latest news with #foodpriceinflation
The Guardian
a day ago
- Business
- The Guardian
Official data expected to show UK inflation remained unchanged in June
Update: Date: 2025-07-16T05:53:38.000Z Title: Ellie Henderson Content: Investec's UK economist said: We expect inflation to have held steady at 3.4% in June, matching the Bank of England's forecast made at the time of the May Monetary Policy Report. We also predict the core measure to have remained unchanged at 3.5%. One part of inflation that has not trended lower as of late is food price inflation. The warmer weather has been blamed for rising food costs, with evidence such as from the BRC shop price inflation measure suggesting it will be an upward influence on the June numbers too. This is likely to spill over into restaurant prices too, and the rise in employers' national insurance contributions will not be helping limit price pressures in this sector, along with wider recreation, either. What has been welcomed however is the downtrend in rental inflation, a factor helping overall services inflation move lower. Looking forward, she said: Looking further ahead we expect more disinflationary pressure to present itself in the data over the remainder of the year. A continual loosening in labour market conditions amidst uninspiring economic growth should, by lowering wage pressures, weigh on services inflation, while our base case is that the recent spike in food price inflation is a temporary phenomenon. Update: Date: 2025-07-16T05:50:34.000Z Title: Introduction: Official data expected to show UK inflation remained stable in June Content: Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. It's UK inflation day! Economists are expecting the headline annual rate to have stayed at 3.4% last month, as rising food prices counter the impact from slower price rises for services. Discounting for clothes could be another factor – especially if the summer sales started earlier than usual. Having spiked in April, inflation eased back in May, albeit only slightly, to 3.4% as measured by the annual change in the consumer prices index (CPI), which tracks the prices of a basket of goods and services each month. The Office for National Statistics releases the data for June at 7am BST. The core rate of inflation, which strips out food and energy (which tend to be volatile) and is closely watched by the Bank of England, is forecast to have stayed at 3.5%. Julien Lafargue, chief market strategist at Barclays Private Bank, said: The market expects UK inflation to have stayed relatively stable in June at 3.4% year-on-year. This would reflect a small uptick in food prices offset by a deceleration in services inflation and still declining energy costs. Given the weaker-than-expected GDP print in May, it would require a meaningful upside surprise in UK inflation for the Bank of England not to lower interest rates in August. Morgan Stanley's chief UK economist Bruna Skarica is also forecasting a 3.4% rate. She explains: Food inflation | An express train: UK food inflation seems to be accelerating. The rise in May was concentrated, and thus initially not that concerning to us. But the British Retail Consortium is now suggesting an express pass-through of the recent hot weather to fruit and vegetable prices. It is peculiar we are not yet seeing a similar dynamic in the euro area food prices, where perhaps margins, competition or volumes all result in a softer pass-through of wholesale costs to retail prices. Core goods | On sale….but when? Summer sales normally start towards the end of June, so an earlier index day might mean a bit firmer clothing prices. Still, we see anecdotal evidence of front-loaded sales, which intuitively makes sense to us, considering the likely front-loading in purchases of summer clothing on mild spring weather in April and May. By contrast, inflation in the United States shot up in June as the impact of Donald Trump's trade tariffs started to show in US prices. Annual inflation rose to 2.7% in June, up from 2.4% in May, data showed yesterday. Last night, Rachel Reeves claimed that rules and red tape are acting as a 'boot on the neck' of businesses and risk 'choking off' innovation across the UK without bold reforms. In a speech to City bosses attending the Mansion House dinner at London's Guildhall on Tuesday evening, the chancellor heaped further pressure on regulators to allow for more risk in order to boost economic growth. 'It is clear that we must do more,' Reeves said. 'In too many areas, regulation still acts as a boot on the neck of businesses, choking off the enterprise and innovation that is the lifeblood of growth. The Agenda 9.30am BST: UK House prices for June 10am BST: Eurozone trade for May 1.30pm BST: US Producer prices for June 2.15pm BST: US Industrial production for June
The Independent
01-07-2025
- Business
- The Independent
Sainsbury's hails highest market share for nearly a decade as sales surge
Supermarket Sainsbury's has notched a jump in sales as it cheered its highest market share for almost a decade. The UK's second largest supermarket said total sales, excluding fuel, rose by 4.9% in the 16 weeks to June 21. Grocery sales lifted by 5% in the group's first quarter, with growth of 4.2% for general merchandise and clothing, while the Argos business saw sales rebound by 4.4%. On a like-for-like basis, excluding fuel and VAT, group sales rose by 4.7% in the best performance for at least a year. The group said it had achieved its highest market share since 2016, saying it had grown share for three years in a row. But the figures come amid further signs of mounting food price inflation, with the latest BRC (British Retail Consortium)-NIQ Shop Price Index figures on Tuesday showing food prices were 3.7% higher in June, up from 2.8% in May. Simon Roberts, chief executive of Sainsbury's, said: 'We know how important it is that we provide consistently great value and we have built further on our strong competitive position, improving our prices against all key competitors year-on-year. 'We're now offering even more opportunities for customers to save on the items they buy most often through the biggest Aldi Price Match commitment in the market, covering around 800 everyday essentials.' The group said strong first quarter performers included Taste the Difference fresh food, which saw sales surge 20% as customers snapped up picnic and deli ranges in the sunny spring and early summer weather. Tu Clothing sales jumped 8%, driven by a 13% leap for womenswear, which the group put down to better design and strong availability. Its Argos business also enjoyed a sales bounce back, with growth increasing to 4.4% from 1.9% in the previous three months – the second quarter in a row of rising sales. It said trading was helped by 'warm and dry weather against a weak comparative'. The group said it was making progress on revamp efforts at the Argos division, focusing on driving more shopping visits and higher basket sizes. Sainsbury's confirmed it was on track with guidance for the full-year, which is set to see underlying operating profits remain flat at around £1 billion as stronger sales volumes are expected to be offset by weaker profitability amid investment in price cuts. 'Profit delivery will be supported by continued growth in Nectar profit contribution and industry-leading cost saving delivery and will be weighted more towards the second half versus last year,' according to the group.
Yahoo
18-06-2025
- Business
- Yahoo
Food prices surge after Reeves tax raid
Food prices rose at their fastest pace in more than a year, official figures show, as grocers were suspected to have passed on the cost of Rachel Reeves's tax raid to consumers. The rate of food price inflation jumped from 3.4pc in April to 4.4pc in May, according to the Office for National Statistics (ONS). It was the largest upward contribution to inflation last month, which was higher than expected at 3.4pc. The consumer prices index (CPI) was unchanged from 3.4pc in April, a figure which was revised lower from 3.5pc after the ONS admitted to an error in its data earlier this month. The rise in food prices came after businesses were hit with higher staff costs in April as a result of changes in Rachel Reeves's October Budget. The Chancellor burdened companies with increases in National Insurance contributions as well as an increase in the minimum wage. Ruth Gregory, deputy chief economist at Capital Economics, said the third consecutive rise in food price inflation 'will be a bit of a blow' for the Bank of England, which is expected to leave interest rates on hold at 4.25pc on Thursday. She said: 'It perhaps provides a tentative sign that firms are passing on more of April's rise in National Insurance contributions in their selling prices.' Andrew Wishart, senior UK economist at Berenberg, said: 'Stronger food price inflation than forecasters (including the Bank of England) anticipated suggests that grocers have enough pricing power to pass increased staff costs and agricultural prices on to customers.' The Bank of England is expected to hold interest rates on Thursday, with inflation above its 2pc target and oil prices surging in the wake of the conflict between Israel and Iran. The latest jump in oil is not included in this month's CPI data. Suren Thiru, economics director at ICAEW, said: 'An interest rate cut on Thursday looks implausible as rate setters will probably want to hold off until August to get a better understanding of the impact of this global uncertainty before taking the plunge once again.' Chancellor Rachel Reeves said: 'We took the necessary choices to stabilise the public finances and get inflation under control after the double digit increases we saw under the previous government, but we know there's more to do.' The FTSE 100 was flat on the day as inflation came in higher than expected in May. The UK's flagship stock index was little changed by lunchtime, while the FTSE 250 was down 0.2pc, amid expectations the Bank of England will keep interest rates on hold on Thursday. It came as the consumer prices index stood at 3.4pc in May, unchanged from the downwardly revised 3.4pc in April. Nick Saunders, chief executive of investment platform Webull, said: 'Investors and homeowners will be looking hard at today's figures, trying to gauge whether what feels like a stabilising inflationary environment will give the Monetary Policy Committee room to make a further cut to interest rates. 'It feels too early, but the tranquil waters give hope for optimism. Certainly, the voting split will be scrutinised hard.' Thanks for following today's updates on inflation. Stay up to date on what's happening in the business world here. There is 'no case for more rate cuts', a former Bank of England policymaker has said, after inflation stood at 3.4pc in May. Andrew Sentance, who was an external member of the Monetary Policy Committee from 2006 to 2011, warned that wage rises and energy prices above 5pc could push underlying inflation higher. Total pay including bonuses hit 5.3pc in May, according to the ONS. Energy prices are poised to fall by 7pc from July under the Ofgem price cap but rising oil prices could push bills back up from October. Households grappling with persistent inflation were given small relief from Britain's property market after the stamp duty holiday came to an end, official figures show. The pace of rising house prices slowed down for the first time in 14 months in the 12 months to April, according to the Office for National Statistics. The average UK house price increased by 3.5pc in the 12 months to April, which was half the 7pc growth recorded in March. It was the first time prices had risen at a slower pace since December 2023 after the stamp duty discount expired at the end of March, cutting the threshold at which movers pay the tax from £250,000 to £125,000. Average house prices increased by 3pc to £286,000 in England, by 5.3pc to £210,000 in Wales, and by 5.8pc to £191,000 in Scotland. Northern Ireland house prices rose by 9.5pc in the first quarter of the year to £185,000. Meanwhile, the average private rent in the UK rose by 7pc – or £87 – to £1,339 per month in May, compared to a year earlier. It marked the fifth month in a row that the annual pace of rent rises had slowed down. The Federal Reserve could anger Donald Trump later by cutting its forecasts for interest rate cuts this year. Policymakers will announce their next decision on interest rates against the backdrop of the conflict in the Middle East and US president's tariff onslaught. Money markets indicate the Fed will almost certainly hold interest rates in their range of 4.25pc to 4.5pc. Harvey Bradley of Insight Investment said markets would closely examine the Fed's quarterly 'dot plot', which charts expectations for when it can cut rates. It last indicated there would be two cuts this year. He said: 'As tensions in the Middle East have the potential to threaten the inflation picture further, it cannot be ruled out that projections adjust to reflect just one rate cut this year.' Chairman Jerome Powell has faced repeated pressure from the US president to lower borrowing costs amid signs the US economy is faltering. US retail sales fell by a larger-than-expected 0.9pc in May, data showed on Tuesday, which was the biggest drop in four months, while the American jobs market added 139,000 jobs last month, down from 147,000 in April. At the same time, the Fed faces the risks of inflation being rekindled by rising oil prices and President Trump's tariffs on imports to the US economy. Eurozone inflation was confirmed to have fallen below the European Central Bank's 2pc target for the first time in seven months. Eurostat said its consumer prices index dropped to 1.9pc in May, down from 2.2pc in April and in line with earlier estimates. Oil prices remained elevated amid the escalating Middle East hostilities, which threatens to push up the cost of living. Brent crude oil, the international benchmark, was set for a weekly rise of 1.6pc, although it was last down on the day by 0.9pc below $76 a barrel. The sharp jump in oil prices since the outbreak of missile strikes last week poses a fresh threat to global inflation on top of US tariffs. Thousands of Tehran residents were reported to have fled from Israel's attacks targeting Iranian leader Ayatollah Ali Khamenei's inner circle, with Donald Trump on Tuesday night poised to enter the war. Israel's largest ever air strike on Iran, launched after it said it had concluded Tehran was on the verge of developing nuclear weapons, has stirred fears of supply disruptions in the Strait of Hormuz, a key route for seaborne oil. Joseph Capurso of Commonwealth Bank of Australia said: 'Clearly the Middle East issues have not been solved, and comments by President Trump just mean that things could get more dangerous in that part of the world. 'The markets are trying to figure out that risk of a big US military intervention. It's hard to say exactly what the market is thinking, but judging by the oil price and currencies, they're certainly pricing in at least some risk that something goes very bad there.' Borrowers will have to 'slog it out' for longer as inflation fears prevent the Bank of England from cutting interest rates, mortgage brokers have warned. Stephen Perkins, managing director at Yellow Brick Mortgages, said: 'The latest inflation figures will further fuel the fires of caution at the Bank of England and cement a rate hold decision tomorrow. The reprieve on mortgage rates will have to wait.' Rohit Kohli, director at The Mortgage Stop, added: 'Inflation has held firm at elevated levels, adding more pressure on consumers and casting fresh doubt on the government's handling of the economy. 'With geopolitical tensions in the Middle East driving up oil prices, inflationary pressures are unlikely to ease anytime soon. The risk now is that inflation starts heading in the wrong direction again.' Ben Perks, managing director at Orchard Financial Advisers, said: 'Enervated borrowers will have to slog it out for a while longer. 'They have been dealt a crippling blow this morning as inflation is still high, at 3.4pc. This kills off any hopes of a base rate cut tomorrow. 'After this morning's data, the ever cautious Monetary Policy Committee (MPC) will resort to their usual 'wait and see' tactics and hold the base rate. 'The MPC really need to lift their heads from the data and look at the struggling borrowers that they are duty bound to serve and support.' Shadow chancellor Sir Mel Stride said this morning's inflation figures were 'deeply worrying for families'. He said: 'Labour's choices to tax jobs and ramp up borrowing are killing growth and stoking inflation – making everyday essentials more expensive.' Panmure Liberum chief economist Simon French points out that more than half the goods used to measure inflation experienced an increase in prices in May by more than 3pc. This was the highest proportion in 15 months. The value of the pound edged higher against the dollar as persistent inflation cemented bets that the Bank of England will leave interest rates unchanged this week. Sterling was up 0.2pc versus the US currency at $1.346 as rising food costs kept inflation stubbornly at 3.4pc in May. There are concerns grocers have pushed up prices to cover the rising minimum wage and National Insurance (NI) contributions. Guy Foster, chief strategist at RBC Brewin Dolphin, said: 'Like most central banks, the Bank of England has spent much of the last few years comfortably exceeding the inflation target and, having cut several times already, they will now be on hold at this week's meeting. 'By the meeting after next, in August, it may be clearer how the NI rise is affecting employment, where some worrying signs have begun to emerge.' The pound was down 0.2pc against the euro at €1.169 as the single currency becomes increasingly viewed as a safe haven from geopolitical turmoil. Rising oil prices are stoking concerns about inflation but are proving a boost for Britain's stock markets. The energy heavy FTSE 100 climbed 0.2pc to 8,847.93 while the mid-cap FTSE 250 rose 0.1pc to 21,250.83. Oil giants Shell and BP gained 0.3pc and 0.4pc, respectively, as crude prices rose over concerns the US could join the Israel-Iran war. Brent crude, the international benchmark, was last at $76 a barrel, having been worth $60 earlier this month. Food prices rose at their fastest pace in more than a year during May, the ONS data showed, raising concerns that companies are passing on rising costs to consumers. The rate of food price inflation jumped from 3.4pc in April to 4.4pc, which was the largest upward contribution to inflation alongside furniture and household goods. Overall inflation stood at 3.4pc in May. It comes as businesses were hit with higher staff costs in April as a result of changes in Rachel Reeves's October Budget. The Chancellor hit companies with increases in National Insurance contributions as well as an increase in the minimum wage. Andrew Wishart, senior UK economist at Berenberg, said: 'Stronger food price inflation than forecasters (including the Bank of England) anticipated suggests that grocers have enough pricing power to pass increased staff costs and agricultural prices on to customers.' Ruth Gregory, deputy chief economist at Capital Economics, said the third consecutive rise in food price inflation 'will be a bit of a blow' for the Bank of England. She said: 'It perhaps provides a tentative sign that firms are passing on more of April's rise in National Insurance contributions in their selling prices.' Economists said the Israel-Iran conflict adds to the reasons the Bank of England is not expected to cut interest rates tomorrow. Oil prices have risen since the outbreak of missile strikes last week, with concerns rising that the US may join the war. Money markets indicate the Monetary Policy Committee (MPC) at the Bank will keep borrowing costs on hold, with traders betting two cuts are likely before the end of the year. Deutsche Bank chief economist Sanjay Raja said: 'The focus now will turn to geopolitical events and the rise in energy prices. 'This will undoubtedly complicate the MPC's task. Higher energy prices will mean higher inflation expectations.' Adam Deasy, economist at PwC, said: 'While gradual disinflation is still the expectation, intensifying tensions in the Middle East and potential oil price spikes provide a further hurdle in the road to price stability.' Suren Thiru, economics director at ICAEW, said: 'The current geopolitical instability is a double-edged sword for inflation because while it may mean a protracted period of higher fuel costs, it could also accelerate the downward pressure on pricing as demand falls in response to these headwinds.' A cut to borrowing costs looks 'implausible' after inflation held at 3.4pc in May, according to economists. Policymakers will decide on Thursday whether to reduce interest rates from the current level of 4.25pc. There was some good news in the data, with closely watched services inflation falling by more than expected from 5.4pc to 4.7pc. Core inflation, which strips out volatile food and energy prices, fell as expected from 3.8pc to 3.5pc, but this was not enough to sway the outlook among economists ahead of tomorrow's rate decision. Niesr associate economist Monica George Michail said: 'We forecast inflation to remain above 3pc for the remainder of the year amidst persistent wage growth and the inflationary effects from higher government spending. 'Additionally, the current tensions in the Middle East are causing greater economic uncertainty. 'We therefore expect the Bank of England to keep rates on hold this Thursday and implement just one further cut this year.' Suren Thiru, economics director at ICAEW, said: 'May's dismally modest drop is unlikely to quell concerns over inflation, as it owed more to the unwinding of distortions caused by Easter falling in April this year, particularly on services prices, than a telling reduction in cost pressures.' He added: 'An interest rate cut on Thursday looks implausible as rate setters will probably want to hold off until August to get a better understanding of the impact of this global uncertainty before taking the plunge once again.' Inflation held at 3.4pc in May, the same as April's figure. Last month, dubbed 'awful April' saw a number of bill rises that pushed up the figure, and industry expects had been expecting to see the measure come down in May. News of the flat figure could mean we're less likely to see a further Bank of England rate cut this month. The consumer prices index (CPI) measure of inflation was affected by increased energy prices, as well as higher sewerage and water bills. Food and drink prices had also risen compared to the same period last year. Core CPI, which strips out volatile prices from food and energy costs, measured 3.5pc, down from 3.8pc the previous month, while services inflation slowed to 5.3pc. This could have a significant impact on your finances – including savings, mortgages and investments. Here, Telegraph Money explains what your options are. The Chancellor said she knows there is 'more to do' after inflation remained at 3.4pc, well above the Bank of England's 2pc target. Rachel Reeves said: 'Our number one mission is to put more money in the pockets of working people through our Plan for Change. 'We took the necessary choices to stabilise the public finances and get inflation under control after the double digit increases we saw under the previous government, but we know there's more to do. 'Last week we extended the £3 bus fare cap, funded free school meals for over half a million more children, and are delivering our plans for free breakfast clubs for every child in the country. 'This government is investing in Britain's renewal to make working people better off.' ONS acting chief economist Richard Heys said inflation held at 3.4pc in May amid a 'a variety of counteracting price movements'. He said: 'Air fares fell this month, compared with a large rise at the same time last year, as the timing of Easter and school holidays affected pricing. 'Meanwhile, motor fuel costs also saw a drop. 'These were partially offset by rising food prices, particularly items such as chocolates and meat products. 'The cost of furniture and household goods, including fridge freezers and vacuum cleaners, also increased.' Inflation was higher than expected last month, official figures show, ahead of the Bank of England's next interest rate decision. The consumer prices index (CPI) rose by 3.4pc in May, according to the Office for National Statistics (ONS). This was unchanged from 3.4pc in April, a figure which was revised lower from 3.5pc after the ONS admitted to an error in its data earlier this month. Analysts had forecast May inflation would edge down to 3.3pc. The Bank of England will announce its next decision on interest rates on Thursday against the backdrop of inflation above its 2pc target. The conflict between Israel and Iran has pushed up the price of oil, raising fresh concerns about inflation. The latest surge in oil is not included in the latest CPI data. Britain has been handed some level of economic certainty after Donald Trump signed the UK-US trade deal at the G7 summit in Canada this week. The US Federal Reserve will announce its next move on interest rates later today. Thanks for joining me. Official figures have showed inflation was higher than expected last month. Here is what you need to know. Rayner's 'jobs police' could intimidate political enemies, Lords warn | Fears that new powers under workers' rights bill could be open to abuse by ministers Britain to rely on France to avoid blackouts this winter | Imported power from Europe will help backstop network on 'tight days' China's electric car revolution is eating itself | The battle royale between Chinese carmakers has descended into a merciless price war Using AI makes you stupid, researchers find | Study reveals chatbots risk hampering development of critical thinking, memory and language skills Jeremy Warner: The next big economic shock is just around the corner | Higher oil prices further increase the Bank of England's interest rate dilemma Oil prices rose amid concerns over escalating hostilities in the Middle East. Investors have grown increasingly nervous over the possibility of more direct US military involvement as the Israel-Iran air war entered a sixth day, with President Donald Trump calling for Iran's unconditional surrender and warning US patience was wearing thin. Oil prices extended their climb, with Brent crude futures up 0.3pc to $76.67 per barrel while US crude rose 0.4pc to $75.16 a barrel. Both had jumped more than 4pc in the previous session. While the broad risk-off moves across markets from earlier in the week abated slightly, the overall mood remained downbeat. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3pc. In currencies, the dollar held to most of its gains against its peers. On Wall Street, stocks stayed under pressure, with the Dow Jones Industrial Average finishing 0.7pc lower, at 42,215.80. The S&P 500 fell 0.8pc, to 5,982.72, and the Nasdaq shed 0.9pc, closing at 19,521.09. In the bond market, the yield on benchmark 10-year US Treasury notes dropped to 4.389pc last night, from 4.454pc late on Monday. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
