London Daily

Focus on the big picture.
Sunday, Jul 06, 2025

UK inflation: Supermarkets say price rises will ease soon

UK inflation: Supermarkets say price rises will ease soon

A drop in the cost of wholesale food prices globally has not led to falls in the prices charged by UK supermarkets.

Inflation was expected to fall below 10% last month but soaring food prices meant it fell by less than expected.

"You would expect to see [global food price falls] reflected in supermarkets but we're not there yet," the Office for National Statistics told the BBC.

The retail industry body said there was a three to nine-month lag to see price falls reflected in shops.

"As food production costs peaked in October 2022, we expect consumer food prices to start coming down over the next few months," the British Retail Consortium said.

Inflation, which measures the rate of price rises, fell to 10.1% in the year to March from 10.4% in February, driven by food prices rising at their fastest rate for 45 years.

There were big jumps in prices for products including olive oil (up 49%), milk (up 38%) and ready meals (up 21%).

Campaigners point out that rising food prices hit poorer households the hardest, as they spend a greater proportion of their income on groceries.

The war in Ukraine has driven up food prices around the world, but the UK has faced other problems on top of this - from Brexit red tape to labour shortages.

This year in particular, bad weather abroad led to shortages of some vegetables - a situation made worse by UK farmers producing less due to surging energy costs.

UK farmers have also argued that supermarkets are not paying a fair price for their produce - something the supermarkets deny.

The government's former food tsar Henry Dimbleby has said supermarkets having "fixed-price contracts" with suppliers means that when food is scarce, some producers opt to sell less to the UK and more elsewhere in Europe.

Grant Fitzner, chief economist for the Office for National Statistics, which provides the figures, said the agency did not make forecasts. But he said it was "certainly within the realm of possibility" that double digit inflation is sustained at least for another month with food prices continuing as they are.


Jane from Blackpool has found the last five to six months tough on the purse, particularly with the weekly shop.

She told the BBC's Radio Five Live that she couldn't afford to eat breakfast or lunch. "For teatime we have a jacket potato with beans. A couple of times a week we'll add cheese to that because we're feeling a little bit more flush. And on a really good occasion we'll have tuna."

For many people like Jane, higher prices across the board have meant having to run on a tighter budget.

"We got a letter last month saying our mortgage rate is going to go up again. I listen to the news in the hope the mortgage rates are going to go down or something's going to give."

Inflation in the UK remains higher than in other Western countries, including the US, Germany, France and Italy. On Wednesday, new figures showed eurozone inflation eased to 6.9% last month, from 8.5%.

Analysts at Capital Economics said UK inflation had "risen further and stayed higher than elsewhere as the UK has experienced the worst of both worlds - a big energy shock, like the euro-zone, and labour shortages - even worse than the US."

UK energy prices are likely to come down quickly, it added, but the issues in the labour market would probably persist until late 2024.

Chancellor Jeremy Hunt said he was still confident that inflation would fall sharply by the end of the year.

He added: "We have a plan and if we're going to reduce that pressure on families, it's absolutely essential that we stick to that plan, and we see it through so that we halve inflation this year as the prime minister has promised."

But Rachel Reeves, Labour's shadow chancellor, said: "The reality is that under the Tories our economy is weaker, prices are out of control and never have people paid so much to get so little in return."

While food prices remained stubbornly high, petrol prices eased, bringing some relief for motorists.

Unleaded petrol prices peaked at about £1.90 in July and were down below £1.50 in March.

Falling inflation doesn't mean prices are falling, but just that the rate of price rises is slowing.


Simon Mellin, founder and chief executive of The Modern Milkman, a milk delivery service, said the food industry had faced soaring costs in recent months, with milk, eggs and packaging prices all going up.

He believes that food prices will start to stabilise, but will remain at a much higher level than they were this time last year.

"I'm really unsure if food prices will drop as much as everyone expects," he told the BBC.

"I expect some reductions but I wouldn't personally expect huge reductions in the next twelve months."

He said he was trying not to pass higher prices onto customers, but added that it was a balance the business had to tread.

The Bank of England has been raising interest rates to try and curb inflation. In March, the Bank increased rates for the eleventh time in a row, taking the main rate to 4.25%.

The idea is that when people have less money to spend, they buy fewer things, reducing the demand for goods and slowing price rises.

Following the latest inflation figures, Luke Bartholomew, senior economist at abrdn, said a further rate rise next month is now "likely", with inflation pressures proving "more persistent than the Bank of England expected".

Rate rises mean higher mortgage payments for some homeowners and those with loans. But they can also benefit savers if banks pass on the higher rate to customers.

Newsletter

Related Articles

0:00
0:00
Close
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
London Stock Exchange Faces Historic Low in Initial Public Offerings
A new online platform has emerged in the United Kingdom, specifically targeting Muslim men seeking virgin brides
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
Richard Kemp: I Felt Safer in Israel Under Attack Than in the UK
Cyclist Says Police Cited Human Rights Act for Riding No-Handed
China’s Central Bank Consults European Peers on Low-Rate Strategies
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Musk Battles to Protect Tesla Amid Trump Policy Threats
Air France-KLM Acquires Majority Stake in Scandinavian Airlines
UK Educators Sound Alarm on Declining Child Literacy
Shein Fined €40 Million in France Over Misleading Discounts
Brazil’s Lula Visits Kirchner During Argentina House Arrest
Trump Scores Legislative Win as House Passes Tax Reform Bill
Keir Starmer Faces Criticism After Rocky First Year in Power
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
Poland Implements Border Checks Amid Growing Migration Tensions
Political Dispute Escalates Between Trump and Musk
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
US Senate Votes to Remove AI Regulation Moratorium from Domestic Policy Bill
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
Jury Deliberations in Diddy Trial Yield Partial Verdict in Serious Criminal Charges
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
King Charles Plans Significant Role for Prince Harry in Coronation
Two Chinese Nationals Arrested for Espionage Activities Against U.S. Navy
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
×