Food prices soar at record rate

Price rises are forcing people to cut back on food shopping and other essentials

Supermarkets and other traders put up fresh food prices at a record rate in December, despite claims that inflation is now falling fast.

Fresh food inflation hit 15 percent last month, up from 14.3 percent in November, according to the British Retail Consortium. It marks the highest monthly inflation rate for fresh food since records began in 2005. Overall, inflation for food hit 13.3 percent in December, the retail bosses’ body said.

Food inflation already hit a rate of 16.6 percent—a 45 year high—last November, according to the Office for National Statistics (ONS). These new figures suggest it might accelerate when the body publishes December figures later this month.

Inflation is the rate at which prices are rising. The latest official data from the ONS showed the rate dropped back slightly recently but remains close to a 40-year high.

The official Office for Budget Responsibility says inflation will fall to 3.8 percent by the end of 2024. But that’s because it is also forecasting a massive recession and spiralling job losses.

The RPI rate of inflation, the most accurate of the official statistics, presently shows prices rising at 14 percent. Any “rise” in pay, benefits, or pensions that is less than that is in effect a pay cut. Union leaders who talk of compromise pay deals—which see a 6 or 7 percent pay “rise”—are accepting massive falls in workers’ living standards.

Other figures published on Wednesday showed that spending on credit cards spiked at the fastest rate in almost two decades in November as the social crisis forced people to borrow more. Credit card debt grew by £1.2 billion in November, figures from the Bank of England showed, which was the highest monthly increase since March 2004. 

A separate ONS survey published last month found that, in the first half of December, 45 percent of people had to cut back on food shopping and essentials. This was because of the surge in living costs.

Rising prices of essentials have the greatest impact on the poorest households, because they spend on average a larger proportion of their income on food.

Meanwhile, a report published on Wednesday highlighted that disabled people, who account for one-third of the poorest households in Britain, were “hugely exposed” to the cost of living crisis.

The Resolution Foundation think tank found that disabled people were almost three times as likely to live in material deprivation as the rest of the population.

It added that 31 percent of disabled people had to reduce their spending on food this winter. Over 40 percent said they could not afford to keep their home warm, as did nearly a quarter of non-disabled people, the Resolution Foundation found.

Report co-author Charlie McCurdy said “while fast-rising prices for essentials are impacting people across Britain” disabled people “are more exposed to the most severe effects”. 

Are increases in workers’ wages to blame for higher inflation?

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TUC union federation analysis shows that workers in Britain have lost an average of £20,000 in real wages since 2008 due to pay not keeping up with inflation. That’s equivalent to £1,450 a year.

The pay squeeze has been even worse for some, with nurses losing an equivalent of £42,000 or £3,000 a year, and paramedics £56,000 or £4,000 a year.

There is more pay misery ahead with estimates that average earnings are set to fall by £79 a month in real terms over the course of 2023. Public sector pay is set to fall by £100 a month. And pay levels are not expected to recover to their 2008 level until 2027.

The growing mood for strikes reflects the explosion after years of pay cuts. Workers need clear victories, not deals that continue the assault.