Soaring fuel and food prices drive rising inflation

Figures from the Office for National Statistics (ONS) show the consumer prices index increase last month from 3% in February, heaping more pressure on household finances already struggling with years of a cost-of-living crisis.

ONS chief economist Grant Fitzner said: “Inflation climbed in March, largely due to increased fuel prices, which saw their largest increase for over three years.

“Air fares were another upward driver this month, alongside rising food prices.”

Food and Drink Federation (FDF) chief economist Liliana Danila noted that food and drink inflation rose to 3.7% in March and said “the clouds are gathering, but the storm has not yet broken on rising food and drink inflation”.

“The war in Iran has delivered a cost shock that is already too large for manufacturers to absorb in full,” she added.

The FDF noted that prices rose fastest in March for beef and veal (18.8%), whole milk (12.7%) and confectionery, adding that it would take between seven and 12 months for cost pressures on manufacturers to feed through to consumers.

Danila said: “The impact on prices will take time to work its way through the system, but it’s only a matter of time before it does.

“For manufacturers, long-term contracts with suppliers and retailers mean it can take up to a year for higher costs to be fully passed through. But where products are less processed, or supply chains are shorter, prices will move more quickly. As a result, absent of any government intervention, we expect a gradual but persistent pick-up in food inflation, reaching around 9% to 10% by the end of the year.

“This means we’re in a crucial window for action to limit the impact on shoppers. We’re working with the government to look at the levers it can pull now to support food manufacturers now to soften the blow on consumers later in the year.”