Inflation falls to 8.7% but food prices are still high
We’ve been talking a lot about inflation rates and interest rates in the United Kingdom in recent posts. The inflation rate tells us how well the economy is performing and how quickly our cost of living is increasing.
In April 2023, the inflation rate in the UK has finally dropped to 8.7% which is the first time that it has been below 10% for several months.
What does the new rate of inflation mean?
Previously, the UK’s rate of inflation was 10.1% (as of March 2023). This meant that any product or service bought would cost you 10.1% more than it did 12 months before.
This rate is now 8.7%, meaning you are looking at paying 8.7% more for goods and services than you would have in May 2022. This is a significant drop in inflation but lower than the expected figure of 8% inflation. Rishi Sunak stated at the start of the year that the government plans to halve inflation by the end of 2023 (a figure of around 5%).
When calculating inflation, the government are considering the prices in April 2022 vs April 2023. April 2022 was when Russia’s invasion of Ukraine caused energy prices to spike. Average energy prices increased by roughly £700 per year because of this (from £1,200 per household to £1,900 per household).
Will UK food prices continue to increase?
It is hard to say if prices will rise (or fall) again this year. Inflation has dropped, but that does not mean prices aren’t still rising. They just aren’t rising as quickly as they were.
The drop in inflation won’t cause food prices to drop immediately. Supermarket pricing will have set prices they pay suppliers for products, which they can be tied into for 6 or even 12 months. They will not be able to drop prices much until after this period, or they risk operating at a loss.
Certain products have already fallen in price though, which is positive news for those struggling with food costs. There has been a reduction in pricing for food products such as:
Will inflation fall further?
It was predicted previously that inflation will fall to manageable levels by the end of 2023. UK chancellor Jeremy Hunt has doubled down on his vow to continue tackling inflation, despite figures falling into single digits.
Though inflation overall is lower, the chancellor agrees that food prices are still rising far to quickly in the UK. He has vowed the government must ‘stick resolutely to the plan to get inflation down’ to tackle this issue.
Labour and Liberal Democrat officials are unhappy with this, stating the government simply isn’t doing enough to help the UK’s poorest families. With the UK in a cost of living crisis, low income families are hit the hardest by high food prices.
According to Statista, in 2022/23 almost 3 million people (2,986,203) in the UK have had to use food banks to get by. These are record numbers and an increase of approximately 802,578 people within one year.
If you are struggling with the high cost of food in the UK, here are some resources that may be of help:
- Trussell Trust – Find a foodbank
- Gov.uk – Get help with the cost of living from your local council
- StepChange (Charity) – Emergency help with money and food
Here, we have more of the latest news about UK inflation, the cost of living crisis and food prices:
- MPO Interest Rate Update May 2023
- Cost of living payment dates 2023
- MPO Budget 2023 review – what does it all mean?
- New supermarket restrictions on fruit and vegetables