London Daily

Focus on the big picture.
Friday, Nov 07, 2025

Food prices will remain stubbornly high for a while but there is good news on inflation ahead

Food prices will remain stubbornly high for a while but there is good news on inflation ahead

Why a sharp drop in inflation lies ahead and the highest rate of food price inflation for 45 years will take longer to ease back down.

The government has made it its primary aim to halve inflation by the end of the year but things aren't quite going to plan.

Britain has shot up the leader board and now has western Europe's highest rate of consumer price inflation.

Economists were expecting the headline rate to fall from 10.4% to 9.8% in March but it only came down to 10.1%.

This may not seem hugely significant, but it has massively raised the prospect that the Bank of England will have to raise Bank rate again to help bring inflation down to target.

That doesn't come without pain. Higher interest rates increase the cost of borrowing, which inflicts a burden on those paying off their mortgages.

For renters, it raises the risk that landlords will pass on higher mortgage costs in the form of higher rents.

By raising interest rates the Bank is trying to dampen demand in the economy, which it hopes will help bring prices back down.

It is focusing on something called "core inflation".

This strips out volatile components like food and energy, which can swing wildly from month to month, and gives economists a better view of domestically generated inflationary pressure.

This remained stubbornly high at 6.2% in March. Economists thought it would come down.

Just last week it was still unclear whether the Bank would raise the interest rate from its current level of 4.25%.

However, the odds were raised on Tuesday, when official figures showed that wages were still rising robustly.

This is something policymakers pay close attention to because higher wages may force businesses to put up prices to cover their costs.

Wednesday's inflation figures have ratcheted up the odds once more. Financial markets believe there is now a 97% chance that the Bank will raise rates by a quarter of one percentage point to 4.5% in May. That is up from 82% yesterday.

Samuel Tombs, economist at Pantheon Macroeconomics, said: "The fall in CPI inflation in March likely is too modest for the MPC (monetary policy committee) to hold back from raising Bank rate one final time next month."

However, Inflation should start to fall more substantially now.


The headline rate should drop to 8% in April as energy prices continue to fall.

Wholesale gas prices have been falling consistently and are now lower than they were in February last year, before the war in Ukraine started.

According to the Institute for Fiscal Studies, this suggests that the average households' annual energy bill will drop to about £2,000 in July, from £2,500 at present, reducing energy's contribution to the headline rate to zero.

After hitting a new record of 19.1% in March, food price inflation should also start to slow.

Shipping, transport and packaging costs have been falling, which has filtered into slowing food producer output prices.

This means the rate of price growth for goods leaving warehouses and factories has been slowing. While price growth may slow, it will take longer for prices to come down from their current level.

James Smith, research director at the Resolution Foundation, said: "Headline inflation should fall sharply next month as the effect of last April's energy price spike falls out of the data.

"But the acceleration of food price inflation to nearly 20% is a major cause for concern, particularly for low-income families who spend a far greater share of their income on food than richer households."

Newsletter

Related Articles

0:00
0:00
Close
On the Road to the Oscars? Meghan Markle to Star in a New Film
A Vote Worth a Trillion Dollars: Elon Musk’s Defining Day
AI Researchers Claim Human-Level General Intelligence Is Already Here
President Donald Trump Challenges Nigeria with Military Options Over Alleged Christian Killings
Nancy Pelosi Finally Announces She Will Not Seek Re-Election, Signalling End of Long Congressional Career
UK Pre-Budget Blues and Rate-Cut Concerns Pile Pressure on Pound
ITV Warns of Nine-Per-Cent Drop in Q4 Advertising Revenue Amid Budget Uncertainty
National Grid Posts Slightly Stronger-Than-Expected Half-Year Profit as Regulatory Investments Drive Growth
UK Business Lobby Urges Reeves to Break Tax Pledges and Build Fiscal Headroom
UK to Launch Consultation on Stablecoin Regulation on November 10
UK Savers Rush to Withdraw Pension Cash Ahead of Budget Amid Tax-Change Fears
Massive Spoilers Emerge from MAFS UK 2025: Couple Swaps, Dating App Leaks and Reunion Bombshells
Kurdish-led Crime Network Operates UK Mini-Marts to Exploit Migrants and Sell Illicit Goods
UK Income Tax Hike Could Trigger £1 Billion Cut to Scotland’s Budget, Warns Finance Secretary
Tommy Robinson Acquitted of Terror-related Charge After Phone PIN Dispute
Boris Johnson Condemns Western Support for Hamas at Jewish Community Conference
HII Welcomes UK’s Westley Group to Strengthen AUKUS Submarine Supply Chain
Tragedy in Serbia: Coach Mladen Žižović Collapses During Match and Dies at 44
Diplo Says He Dated Katy Perry — and Justin Trudeau
Dick Cheney, Former U.S. Vice President, Dies at 84
Trump Calls Title Removal of Andrew ‘Tragic Situation’ Amid Royal Fallout
UK Bonds Rally as Chancellor Reeves Briefs Markets Ahead of November Budget
UK Report Backs Generational Smoking Ban Ahead of Tobacco & Vapes Bill Review
UK’s Domino’s Pizza Group Reports Modest Like-for-Like Sales Growth in Q3
UK Supplies Additional Storm Shadow Missiles to Ukraine as Trump Alleges Russian Underground Nuclear Tests
High-Profile Broodmare Puca Sells for Five Million Dollars at Fasig-Tipton ‘Night of the Stars’
Wilt Chamberlain’s One-of-a-Kind ‘Searcher 1’ Supercar Heads to Auction
Erling Haaland’s Remarkable Run: 13 Premier League Goals in 10 Matches and Eyes on History
UK Labour Peer Warns of Emerging ‘Constituency for Hating Jews’ in Britain
UK Home Secretary Admits Loss of Border Control, Warns Public Trust at Risk
President Trump Expresses Sympathy for UK Royal Family After Title Stripping of Prince Andrew
Former Prince Andrew to Lose His Last Military Title as King Charles Moves to End His Public Role
King Charles Relocates Andrew to Sandringham Estate and Strips Titles Amid Epstein Fallout
Two Arrested After Mass Stabbing on UK Train Leaves Ten Hospitalised
Glamour UK Says ‘Stay Mad Jo x’ After Really Big Rowling Backlash
Former Prince Prince Andrew Faces Possible U.S. Congressional Appearance Over Jeffrey Epstein Inquiry
UK Faces £20 Billion Productivity Shortfall as Brexit’s Impact Deepens
UK Chancellor Rachel Reeves Eyes New Council-Tax Bands for High-Value Homes
UK Braces for Major Storm with Snow, Heavy Rain and Winds as High as 769 Miles Wide
U.S. Secures Key Southeast Asia Agreements to Reshape Rare Earth Supply Chains
US and China Agree One-Year Trade Truce After Trump-Xi Talks
BYD Profit Falls 33 % as Chinese EV Maker Doubles Down on Overseas Markets
US Philanthropists Shift Hundreds of Millions to UK to Evade Regulatory Uncertainty in Trump Era
Israeli Energy Minister Delays $35 Billion Gas Export Agreement with Egypt
King Charles Strips Prince Andrew of Titles and Royal Residence
Trump–Putin Budapest Summit Cancelled After Moscow Memo Raises Conditions for Ukraine Talks
Amazon Shares Soar 11% as Cloud Business Hits Fastest Growth Since 2022
Credit Markets Flooded with More Than $200 Billion of AI-Linked Debt Issuance
U.S. Treasury Secretary Scott Bessent Says China Made 'a Real Mistake' by Threatening Rare-Earth Exports
Report Claims Nearly Two Billion Dollars in Foreign Charity Funds Flowed into U.S. Advocacy Groups
×