Cost-of-Living Crisis Escalates

UK Grocery Inflation Hits Record High

Date: 31 January 2023 - 21:42

News ID: ۱۱۲۰۰۴

LONDON (Reuters/AFP) -- British grocery inflation hit a record 16.7% in the four weeks to Jan. 22, dealing another blow to consumers battling an escalating cost-of-living crisis, industry data showed on Tuesday.
Market researcher Kantar said grocery inflation was at its highest since it started tracking the figure in 2008, with prices rising fastest for essential products such as milk, butter, cheese, eggs, dog food and toilet rolls.
It said UK households now face an additional 788 pounds ($974) on their annual shopping bills if they don’t change their behavior to cut costs.
“Late last year, we saw the rate of grocery price inflation dip slightly, but that small sign of relief for consumers has been short-lived,” Fraser McKevitt, Kantar’s head of retail and consumer insight said, noting the figure jumped a “staggering” 2.3 percentage points from December’s reading.
After a tough 2022, British consumers are facing an even tighter squeeze on their finances this year as the government cuts back support on household energy bills and mortgage rates rise.
The Bank of England is expected to raise its main interest rate by half a percentage point to 4% on Thursday.
Earlier this month, Ken Murphy, chief executive of market leader Tesco, said grocery inflation may not have peaked but was hopeful it would by the middle of the year.
Official data published this month showed overall consumer price inflation fell to 10.5% in December. The Bank of England expects it to fall to around 5% by the end of 2023 as energy prices stabilize.
PM Sunak Defends ‘Bregret’
British Prime Minister Rishi Sunak defended Brexit as a “huge opportunity” on Tuesday, as the UK marked three years since leaving the EU amid economic crisis and a growing public sense of “Bregret”.
On January 31, 2020, the United Kingdom ended 47 years of belonging to the European Union and its predecessor, the EEC, soon after Boris Johnson won a resounding election victory for the Conservatives with his promise to “get Brexit done”.
An Ipsos poll last week found 45 percent of people in Britain think Brexit is going worse than they expected.
Sunak called Brexit a “huge opportunity to deliver” on his priorities of growth, employment and social mobility.
The statement came as Sunak faces numerous challenges, with thousands of UK workers taking strike action over pay that has been outpaced by soaring inflation.
The cost-of-living crisis has hit millions and inflation has soared above 10 percent.
While saving the over-stretched state-funded health service (NHS) was a keystone of the Brexit campaign, NHS workers including nurses and ambulance staff are now striking over pay and working conditions.
Brexit, which was in part a backlash against the free movement of people and goods across the EU, has led to restrictions that have hit food supplies to the UK and made it harder to hire foreign workers.
Yet the numbers of migrants making the dangerous Channel crossing to claim asylum in the UK reached a record level of 45,000 last year.
The UK has also seen a period of political instability, with three prime ministers last year.
Sunak did not mention the problems in Northern Ireland surrounding post-Brexit trading agreements that have led to months of negotiations between London and Brussels and paralyzed self-government in Belfast.
There are no celebrations planned to mark the anniversary and in Scotland, where most voted to stay in the EU, opponents planned a torchlit procession through Edinburgh.
“Today’s Brexit anniversary marks three years of political mayhem and economic calamity,” a columnist wrote in left-wing broadsheet The Guardian.
Even right-wing broadsheet The Sunday Telegraph wrote there was “a growing sense of ‘Bregret’ taking hold in Britain”, questioning: “Is there really much cause for celebration?”
A study by Bloomberg Economics published on Tuesday said: “Brexit is costing the UK economy 100 billion pounds a year ($124 billion), with the effects spanning everything from business investment to the ability of companies to hire workers.”
The Office of Budget Responsibility predicts that the new trading relationship between the EU and UK will reduce long-term productivity by four percent, as compared to staying in the EU.
Nevertheless, even the opposition in parliament is not calling for Brexit to be reversed.
Keir Starmer, the leader of the main opposition Labour Party, which is riding high in the polls, has vowed to reconnect with Europe but ruled out taking the UK back into the European Union or its single market.
The IMF significantly downgraded its UK growth forecast on Monday, predicting its economy would contract by 0.6 percent this year. Britain looks set to suffer more than most from soaring inflation and higher interest rates.