Food prices continue to soar

A recent report has shown that food prices are continuing to soar and add further pressure to already strained household finances, with food inflation thought to have gone up by around 7% in the space of a year. It is thought that the rate of inflation could rise even higher as a result of the increase in food prices, and many households are finding it harder and harder to keep up with costs, with living costs going up so sharply.

One economist said: ‘The market jump in shop prices reinforces the belief that the Bank will keep interest rates unchanged, even though the economic downturn is deepening and recession is becoming a very real danger.’

He added: ‘Indeed, the Bank remains trapped between the rock of rising inflation and the hard place of markedly slowing economic activity. However, given current inflation levels and risks, the Bank of England may well be reluctant to cut interest rates until 2009 unless the economy really falls off a cliff.’

Another official said: “In recent weeks we’ve seen more cost price inflation in fresh and chilled foods as well as in some staple categories and this is adding to the cost of the weekly shopping basket. As a result we’re seeing further price cuts by the major supermarkets to stimulate demand at a time when many households are under increased cost pressures from higher fuel and utility bills.’

Food prices are not the only thing to have impacted on household finances over recent months, as rising energy bills, increased petrol prices, and a range of other price hikes have all made affordability more difficult for households, and have added further strain to household budgets.

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