Food prices rise at the fastest rate on record

Food prices are rising at the highest level since records began, according to the latest official statistics.

Factory gate prices, the amount manufacturers charge buyers such as supermarkets, increased by 11.4pc last month compared to the year before.

It is a rise that is likely to be passed on to consumers. In July, prices were 10.8 per cent up on the year before. Experts warn that while overall inflation looks to be easing, food prices are likely to remain high for some time to come.

The Office of National Statistics said factory food inflation, measured in the Producer Prices Index, was running at the highest level since it started monitoring prices in 1986.

It added that meat, yoghurt and bread prices continued to rise between July and August. The figures come as leading food executives and scientists warned that families faced paying high prices for their weekly shop for “at least 10 years”, as increasing number of mouths to feed around the world.

However, despite the poor news about food prices, most economists were upbeat about the overall inflation numbers, which show signs of easing.

“Today’s figures for both input and output prices show that inflationary pressures at the factory gate may have reached its peak. Hence, consumer price inflation will begin to ease in the coming months,” said Nur Ata, economist at the think tank Centre for Economics and Business Research.

The overall output figure fell from 10.3 per cent in July to 9.7 per cent, as the price of petrol came down from its high of 119.7p at the pumps – making it cheaper to truck goods around the country.

Falling oil prices also help reduce factories’ packaging and energy costs. Experts are hopeful that the lower figures will make it easier for the Bank of England to cut interest rates later this year.

Howard Archer, chief UK economist at Global Insight, said: “The Bank of England will be pretty pleased with the August producer price inflation data, and it reinforces our belief that interest rates will be cut from 5 per cent to 4.75 per cent in November.”

Source: Telegraph.co.uk