Inflation is predicted to drop into single figures however the worry that food prices are still too high prevails. Whether the dropping inflation is an indicator of dropping food prices remains to be seen.
Britain is one of the countries with the highest cost of living. Rising food prices are of great concern to the authorities and above all to the public. Rising food prices mean people have to fight to get their hands on basic supplies. However there’s good news in the waiting. Economists say they expect food prices to fall below 10% when this week’s consumer price index is released. They further expect the National Bureau of Statistics to report a figure of about 8% on Wednesday.
Britain’s inflation is in the single digits for the first time in eight months and will be a big wave of relief for the country. But is it really so, that is the question we need to address here. Britain’s inflation rate is falling, but will this reduction alone be sufficient to deal with rising food prices in the long term?
The consequences of too much and too little
Lower inflation may provide relief, but we need to know if this will hold up over time. What is terrifying the Bank of England’s rate-setting monetary policy committee is an upward spiral in which wages will chase inflation, especially food inflation, and then inflation will chase wages. Too little policy check and inflation will start to rise unchecked. Too much and the UK economy will plunge headlong into recession.
“It’s also worth noting that the decline in inflation does not indicate that prices are falling, but rather that prices are rising at a slower pace than before,” said Richard Hunter, market director at Interactive Investor told the National newspaper. This is an indicator that the crisis has not averted and a lot more needs to be done to tackle it.
Therefore, although even the most recent round of pay increases may not necessarily keep up with these increasing expenses, there should be some moderation on the increase in products and services that cost-conscious customers are experiencing.
The fact that pay increases itself contribute to the crisis adds another layer of complexity. Meanwhile, as it seems households are swapping one inflationary problem for another, the Bank of England is, once again, being accused of doing too little, too late.
Food prices will have a significant impact on inflation
As native crops begin to replace more expensive imports, food costs in the UK often start to decline throughout the summer. However, there has been a noticeable increase in farm gate pricing thus far this year.
Food for Thought, a report from the Resolution Foundation, projects that by the summer, increases in food prices will have a greater impact on the economy as a whole. This inflationary crisis must be contained as soon as possible. Otherwise, the already dire consequences will be even worse.
The way ahead in this inflation crisis
Finance Minister Jeremy Hunt urges food manufacturers to do everything in their power to help consumers amid soaring food prices. The finance ministry said the prime minister will meet with industry officials on Tuesday to express his concerns over the rise of food inflation.
“We know food prices are continuing to rise, and we need to understand why,” Hunt said.
“That is why I am asking industry to work together to halve this crisis to reduce the pressure on
households.”
The prime minister will also meet with competition officials to discuss an investigation into whether the failure of competition is causing consumers to pay higher than necessary prices for food and fuel. On the global front, rising inflation in the UK , especially food prices, brings to the table the issue of food security. The issue of food security needs to be addressed and tackled and PM Rishi Sunak has brought this to the attention in the ongoing G7 meet.
Finding a long term solution to the food security issue is critical to averting this crisis. Policy makers and government must work together for the well-being of the citizens because ultimately they are the main priority here.
