Yahoo Finance Bread, meat and biscuits get cheaper as UK food inflation drops
The UK rate of inflation unexpectedly remained unchanged at 4% in January, with the first monthly fall in food prices for more than two years offsetting the rise in gas and electricity costs.
Prices for food and non-alcoholic beverages fell by 0.4% on a monthly basis, marking the first decrease since September 2021, and the largest fall since July 2021, according to the latest figures from the Office for National Statistics (ONS).
Bread and cereals were part of the reason behind the fall, meaning things like cream crackers, sponge cakes and chocolate biscuits were all cheaper. Additional items that drove the drop were home cooking sauces, instant coffee and potato crisps.
Balwinder Dhoot, director of sustainability and growth at The Food and Drink Federation, said: "It’s encouraging to see a decline in food and drink inflation to 7% in January. Any reduction is important to households struggling to afford higher food bills, and for business who are paying higher salaries at a time when they are continuing to streamline production costs to deliver competitive prices for shoppers.
Read more: UK inflation holds steady at 4%
"Unpredictable weather patterns persistently impact agricultural yields. Ongoing navigation challenges in the Red Sea, coupled with rising shipping costs, may soon exert pressure on energy prices, and, therefore, on food prices, given the energy-intensive nature of the food and drink industry. The extent of this impact hinges on the duration of ship diversions from the Suez Canal and any escalations in the Middle East."
However, the food inflation slowdown isn't consistent across all goods. For instance, while prices for whole milk and butter have eased by 10% and 7.8% respectively, olive oil is up by 38.2%, cocoa and powdered chocolate has risen by 25.1% and sugar is up by 18%.
Furniture prices also fell at the fastest monthly rate in four years amid steep reductions for kitchens, leather settees, dining tables and chairs.
Keeping prices rising was the energy price cap, which rose in January, bringing up the cost of gas and electricity.
The new energy price cap meant the typical annual household bill went up to £1,928, an increase of £94.
ONS chief economist Grant Fitzner said: “Inflation was unchanged in January reflecting counteracting effects within the basket of goods and services.”
Read more: What is inflation and what does it mean for you?
“The price of gas and electricity rose at a higher rate than this time last year due to the increase in the energy price cap, while the cost of second-hand cars went up for the first time since May.
“Offsetting these, prices of furniture and household goods decreased by more than a year ago and food prices fell on the month for the first time in over two years.”
“All of these factors combined resulted in no change to the headline rate this month.”
Watch: UK's Hunt says inflation fight isn't over
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