Remarkably benign UK food prices keep a lid on inflation
The bar for a Bank of England rate hike remains high. That’s the main message from today’s UK inflation figures. Headline inflation is up three-tenths of a percentage point to 2.9%, on the well-telegraphed rise in household energy bills and also a bigger rise in social rents than this time last year. That was offset ...
The Bank of England's latest inflation figures reveal that UK food prices are remarkably stable, keeping a lid on rising inflation. Headline inflation rose slightly to 2.9%, driven by increased energy bills and higher social rents, while petrol and diesel prices dropped temporarily. Food prices remained flat on the month, a surprising deviation from recent trends.
This unusual stability could potentially lead to negative food inflation in annual terms. While this is good news for the Bank's hawkish critics, who emphasize the impact of food prices on household inflation expectations, it may still take a year for the full effects of the Iran war to be felt. Nonetheless, the Bank remains cautious about rate hikes.
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