Food costs

Shop price slowdown points to interest rate cuts

supermarket food
Prices of food are rising at their slowest in two years

Shop price inflation has slowed to its weakest in nearly two years, easing the cost of living and opening the door to early interest rate cuts.

Figures from the British Retail Consortium and NielsenIQ’s showed pricers fell to 2.9% in the year to January, a sharp fall from 4.3% last month.

Food inflation is a main driver of price pressures and is at its lowest sine June 2022, but it remains at 6.1% this month.

The figure is prevented from falling more sharply by alcohol prices continuing to be high as a result of an increase in sales taxes.

Even so, the data points to CPI inflation falling significantluy from 4% in December amid speculation it could hit the Bank of England’s 2% target by April.

The Bank of England is expected to leave the UK base rate unchanged at 5.2% on Thursday, a 15-year high, but markets are pricing in at least one cut this year.

The bank is also likely to raise its forecast for UK GDP growth.

It follows a report from the Institute of Chartered Accountants of England and Wales which reported a Scottish corporate confidence.

Scotland’s Wellbeing Economy Secretary Neil Gray insisted the report shows the robustness of Scottish businesses, despite the challenges they face.

“It is encouraging to see that both Scotland’s domestic sales and export sales are growing faster than the UK average, supporting profit growth,” he said.

“We cannot under-estimate the seriousness of the cost of living crisis which continues to hamper households and businesses’ ability to spend, to the detriment of the wider economy. Industry also continues to suffer due to Brexit’s effect on supply chains, trade and the free movement of people.

“The Scottish Government is doing all it can with the limited powers available, including supporting business exports to produce increased international sales.  We are also working to increase access for Scottish businesses to international labour and skills, through our Talent Attraction and Migration Service.

“Through the New Deal for Business Group, the Scottish Government will continue to ensure companies are informed early of decisions affecting them – including on regulations – providing as much time as possible to provide input, to react and to prepare for any changes.”



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