UK inflation eased, reaching 8.7% year-on-year in April, compared with 10.1% in March, although this decline is below expectations as food prices remain increasing.
Despite the fact that inflation is at its lowest level since last August, the British Office for National Statistics (ONS) reported today that food prices continue to register a high rise, which raises questions about the persistence of this trend.
“The rate of inflation has come down because the strong rises in energy prices seen last year have not been repeated” in April, said Grant Fitzner, chief economist at the ONS.
The decline in inflation is partly due to the fact that energy prices have stopped skyrocketing, unlike a year ago when Russia invaded Ukraine and imposed sanctions.
This situation had a direct impact on wholesale food prices, as Ukraine is a major producer of grains and sunflowers, essential elements in the food industry.
In addition, the extreme weather also affected crops such as beets used to produce sugar and some vegetables.
Despite this decrease in the rate of increase in food prices, these continue to rise at rates close to historical maximums, and according to the ONS chief economist, although the prices paid by companies for national food materials decreased, the same has not been reflected on supermarket shelves.
Imported food prices also experienced a considerable drop, but this has not yet been passed on to final consumers.
Persistently high food prices pose a challenge for policymakers, who are seeking to stabilize inflation and protect citizens’ purchasing power as they continue to place a significant burden on British households.
According to BBC reports, retailers say lower wholesale prices are slow to show up on supermarket shelves because of the long-term contracts they often sign with food producers.
This situation makes it difficult to transmit cost reductions to final consumers.
The head of the supermarket chain Mark & Spencer, Stuart Machin, stressed that the retail company made investments to protect customers from the effects of inflation, despite the fact that this affected its profit margins, but considered that this measure is the right one to support consumers.
In addition, the Competition and Markets Authority (CMA) launched an investigation into UK supermarket food and fuel prices, with the aim of better understanding pricing dynamics and ensuring a fair environment for consumers.
The CMA said it would look at whether a “failure to compete” meant customers were overpaying.
Meanwhile, supermarkets said they were working to keep food prices “as low as possible.”