BBC News website - UK inflation: Food prices rise at fastest rate for 45 years

MattMattMattUK

Prices on pretty much anything are not going to come down and further inflationary price rises are baked in now, it looks like even 6% by the end of the year might be highly optimistic and 8% is well within the range of probability. 5.5% for base rate seems likely before dropping back next year. Core inflation is embedded now, it will take another year to work it's way through even if the month on month figure hit zero and that will not happen.

There is a chance we could have some deflation in late 2024 or 2025, but it would be on consumer goods, not food.

MattMattMattUK

Rosa_Damascena said:

p00hsticks said:

Rosa_Damascena said:

p00hsticks said:

Rosa_Damascena said:

The drop in energy prices is taking its way to work through the system. What are the chances of the cost of staples such as milk - which we know shaft the farmers royally - ever coming down?

As the article points out, falling inflation doesn't translate to prices coming down, merely to them increasing at a slower rate. (The headline is 'supermarket price increases will ease soon', not that supermarket prices will decrease). 

So in my view, even substantial drops in energy prices are unlikely to result in much of a price decrease, if any. 

Although I thought I saw something recently about a potential government proposal to out a price cap on staples such as bread and milk (I bet the farmers loved that one!)

The price of oil has now dropped to 2013 levels: https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/kj5u/mm23 . Independently of the BBC headline, economics indicates that prices will actually go down as opposed to the rate of inflation slowing. If it doesn't we know that these savings are being siphoned off elsewhere before the item gets to the consumer.

But a lot of the resulting increases are now baked into prices, particularly labour costs . 
Employers aren't now going to turn round to employees and say 'you know that pay increase we gave you last year because of inflation - well now we're going to take it back off you because the price of oil is decreasing.'   

I didn't realise that the private sector wages had gone up 
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/averageweeklyearningsingreatbritain/april2023#:~:text=Average regular pay growth was,2005 when it was 5.4%.
 (am firmly public sector where we have had to fight) although I appreciate its doesn't match inflation. 

The 6.9% rise is also only at the end of February, I suspect now it is even higher, in April the NLW went up 9.7% for most and 10.9% for those 21-22. In many sectors annual pay increases in April have been in the 15-20% range and in sectors with significant shortages of skilled workers even higher, we are already in a short term spiral, the hope has to be that it stays short term.