Good News – The Price of Crumpets and Chocolate Biscuits Are Falling

Reading the news can be a depressing thing with reports on wars, terrorist attacks and disasters, but the NTI newsroom can finally bring you a good news story – the price of crumpets are down.

The rate consumer prices have been rising at fell to 3.2% in the year to March, down from 3.4% the month before, and a peak of 11.1% in late 2022. 

According to the Office for National Statistics (ONS), meat prices fell by 0.5% between February and March, as well as the aforementioned crumpet and chocolate biscuits price falls.  However, bread and cereals saw a slight price increase.

The largest driving factor behind high UK inflation was the rise in oil and gas prices given increased demand post pandemic, which increased further after Russia’s invasion of Ukraine.  Ukraine, known as the breadbasket of Europe, had a pre-war share of global wheat exports of 10% (fifth highest worldwide), sunflower seed exports of 42% (highest), corn 16% (second highest), and in barley 10% (third highest).  The conflict ha reduced the amount of grain for sale, pushing up food prices.

No article on the latest inflation data would be complete without thoughts turning to the Bank of England's next decision on interest rates, which happens on 9 May.  On Tuesday, governor Andrew Bailey said the question for rate-setters at the Bank was how much more evidence was necessary before starting to cut interest rates in the coming months.

Core inflation, which strips out the effect of more volatile energy and food prices, also eased to 4.2% in March.  This level was still slightly higher than economists expected (when are they ever not surprised). Services inflation, which looks at price rises seen across hospitality to hairdressing, and stood at 6%, down from 6.1% in February.

Ian Stewart, chief economist at Deloitte, said that while inflation may be in "retreat", "the Bank of England cannot yet be sure that it is beaten". With "the economy reviving, the Bank will be in no hurry to cut interest rates", he said.

Yael Selfin, chief economist at KPMG UK, also said that Wednesday's figures were "unlikely" to have a drastic change of the Bank’s thinking.  She added, "Oil prices have rallied over the past month which has led to an increase in prices at the pump for consumers. Also, the hike in the National Living Wage could potentially contribute to persistence in services inflation which remains elevated."

In one more piece of good news, today’s figures to not include the reduction in the energy price cap which took effect at the beginning of this month,  As a result, the next inflation figure is also predicted to fall.