Food price rises slow as UK inflation remains at 3.8%

UK Food Price Inflation Eases But Overall Rate Remains Unchanged

Food and drink prices in the United Kingdom have recorded their lowest rate of inflation in over a year for the third consecutive month, according to official figures, while the overall Consumer Prices Index (CPI) inflation rate remained stable at a higher-than-expected level.

The overall inflation rate held steady at 3.8% in the year to September. This figure is significantly higher than the Bank of England's 2% target, and was above the central bank's own forecast of 4%. The Office for National Statistics (ONS) confirmed that the 3.8% rate in September will be used as the benchmark for increasing most welfare benefits next April.

Food and Drink Prices: The Encouraging Dip

The inflation rate for food and non-alcoholic beverages fell to 4.4% in the year to September, down from 5.1% in the year to August. This indicates that while prices are still rising, they are doing so at a much slower rate.

Crucially, on a month-on-month basis, the cost of food and non-alcoholic beverages actually fell by 0.01% between August and September—the first monthly decline in 16 months.

• Key Drivers of the Fall: The ONS attributed the decline to slightly cheaper prices for staples such as vegetables, milk, cheese, eggs, bread and cereals, fish, mineral waters, soft drinks, and juices. Increased sales and discounting by retailers were also cited as a likely factor.

• Continued Rises: However, the cost of specific items, including red meat and chocolate, continued to increase. As mother Kayleigh Brannan told the BBC, the price of meat, in particular, had risen, adding pressure to household budgets, especially with maternity pay often being insufficient to cover bills and mortgages.

Causes and Commentary

Grant Fitzner, ONS Chief Economist, noted that the main upward contributors to the overall inflation figure came from petrol prices and airfares, although the price increases in those areas were less severe than the previous year. These increases were partly offset by lower prices for some recreational and cultural products and live events.

Mr. Fitzner described the dip in the food inflation rate as "encouraging," but cautioned that prices are "still running very high at 4.4 percent," and stressed that they would "have to see what happens in future months."

James Walton, chief economist at the Institute of Grocery Distribution, stated that the slowing rate "aligns with our expectations that food inflation will slow" and suggested, "We may have seen the peak." However, he pointed out that retailers' costs are still rising year-on-year, and manufacturing challenges (such as bad weather) are pushing up prices for items like red meat, coffee, and chocolate.

Danni Hewson, Head of Financial Analysis at AJ Bell, commented that while the paring back of prices for staples like vegetables and bread was good news, such small monthly changes would not make a significant difference to people's overall supermarket bills.

Political Reaction and Pension Increase

The figures drew criticism from both sides of politics:

• Chancellor Rachel Reeves said she was "not happy with these figures," asserting that the economy has been "stagnant for far too long" and pledging that the government will continue to help those "struggling with higher bills and the cost of living."

• Shadow Chancellor Mel Stride took to X (formerly Twitter) to argue that inflation running at nearly double the Bank of England's target was "pushing up the cost of living and punishing those Labour promised to protect."

The overall inflation rate of 3.8% for September is significant as it determines the annual increase for many benefits. The State Pension, however, is protected by the 'triple lock', which guarantees it rises by the highest of either inflation, average wage increases, or 2.5%. Since the figure for average earnings (4.8%) is currently higher than the September inflation rate (3.8%), the increase in wages is expected to determine the State Pension rise for the next financial year.