The UK faces a bleak winter as food prices soar
UK households face a ‘bleak winter’ as shop prices continue to accelerate, driven by food.
Food inflation has risen to a new record, with prices rising by 12.4% over the past 12 months.
Items such as eggs, meat, dairy products and coffee soared, according to the latest data from the British Retail Consortium (BRC). This lifted fresh food inflation to 14.3%, up from 13.3% last month.
These rising prices are a big blow to shoppers in the run-up to Christmas, especially poorer households, in addition to higher energy bills and falling real wages.
Photograph: BRC
Overall shop prices are now 7.4% higher than last November, compared with 6.6% in October, the highest since the BRC started cutting its numbers in 2005.
Helen Dickinson OBE, CEO of the BRC, warns that Christmas will also be more expensive this year.
“Winter is looking increasingly bleak as price pressures continue unabated. Food prices have continued to rise, particularly for meat, eggs and dairy, which have been hit by rising of energy costs and the increase in animal feed and transport costs.
Coffee prices also rose last month as high input costs filtered through to price tags. Christmas presents will also be more expensive than in previous years, and sports and recreational equipment will see particularly steep increases.
Rising inflation means the UK is expected to suffer its worst fall in living standards since at least the 1950s.
A chart showing how UK living standards are set for the biggest fall on record in 2023-24
Dickinson predicts that many households will cut back on seasonal spending to prioritize the essentials.
Retailers are continuing to do everything they can to support their customers and make sure everyone can enjoy the festive season by fixing prices on many essentials, offering discounts to vulnerable groups, increasing pay for their own people and extending their value ranges”.
Here’s the full story:
Updated at 0717 GMT
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Inflation in France remains at an all-time high, but lower than in the UK thanks to a cap on French energy bills.
Consumer prices in the eurozone’s second-largest member rose 7.1% year-on-year this month, the same as in October, with hopes of a small fall.
Analysts had expected the French CPI to fall to 7%.
Still, it’s lower than in the UK, where prices rose 11.1% in the year to October.
French families were protected from rising gas and electricity prices this year, because President Macron set a 4% cap on price increases at state-owned EDF.
🇫🇷 French inflation remained unchanged in November (7.1% IPCA and 6.2% CPI), as energy remained high (18.5%) and food inflation picked up (12 .2%). But inflation in services seems to have turned around, up to 3% in November. pic.twitter.com/Sqss06OswC
— Frederik Ducrozet (@fwred) November 30, 2022
Ofgem proposes new price controls for local electricity networks
Britain’s local energy grid operators will be forced to spend more of their profits investing in the country’s electricity grid as Ofgem said it would not allow any increase in customers’ bills.
In a new set of price controls to run from 2023 to 2028, the regulator said it would keep costs for consumers at around ÂŁ100 a year. This is no change from today.
Ofgem is pushing these networks to develop cheaper and cleaner local networks at no extra cost to consumers, investing to support a move away from imported fossil fuels.
To do this, companies will have to invest a larger share of their profits and reduce operating costs.
The companies affected include Scottish and Southern Electricity Networks, Northern Powergrid, SP Energy Networks, Electricity North West, National Grid and UK Power Networks.
Finland on the brink of recession
Just in: Finland has suffered a deeper than expected contraction as rising inflation hit its economy.
Finland’s GDP shrank 0.3% in the July-September quarter, new data showed, ending a streak of five quarters of growth.
Private spending fell as the reduced cost of living in Europe hit households.
Finland is now on the brink of recession, as Timo Hirvonen, chief economist at Helsinki-based Svenska Handelsbanken AB, said on Twitter.
“We expect to see a contraction in the fourth quarter as well, which would technically mean a recession for the Finnish economy.”
The volume of GDP in Finland decreased in the third quarter of the current year by 0.3% compared to the previous quarter, but increased by 1.0% compared to last year. We expect GDP volume to also decline in the fourth quarter and the Finnish economy to then be in a technical recession. pic.twitter.com/0HAOAJhASn
— Timo Hirvonen (@HirvonenTimo) November 30, 2022
Cracking down on international students could hurt college credit ratings
Richard Adams
According to credit rating agency Moody’s, a crackdown by the UK government on international student visas would have a negative effect on the financial situation of British universities.
Zoe Jankel, senior analyst at Moody’s, said:
“If implemented, the policy would be credit negative for the UK university sector due to a fall in revenue and margins due to international students paying much higher fees than domestic students.”
Moody’s said universities with high international rankings such as Oxford “would likely remain outside the scope of the restrictions, however, due to their strong market positions thanks to their ability to attract consistently high student demand and research funding,” our education editor Richard Adams. reports
However, Moody’s singled out Keele University and Leicester’s De Montfort University as vulnerable to policy changes, saying that…
“It would be more exposed, especially De Montfort University due to its greater reliance on international tuition fees, which accounted for 25% of its total revenue in fiscal year 2021.”
[Last week, Downing Street said that prime minister Rishi Sunak was considering curbs on foreign students taking “low quality” degrees (which they didn’t define) and restricting visas for students’ dependants.]
Moody’s said the University of Manchester and University College London were the most reliant on income from international students, contributing 32% and 31% of their total income in 2020-21, but added:
“Their excellent market positions, however, mean they are unlikely to be the targets of the government’s proposal.”
Moody’s also noted that universities were under pressure from the freezing of national tuition fees in England since 2017 and rising staff costs, as well as rising inflation which “may reduce operating margins already thin”.
Updated at 07.51 GMT
The poorest students on more than ÂŁ1,000 fare worse this year, the IFS warns
Sally Weale
England’s poorest students will be more than ÂŁ1,000 worse off this academic year than last, due to rising inflation.
A new analysis has warned that many students face “significant difficulties” this winter, because prices have risen faster than expected.
According to the Institute for Fiscal Studies (IFS), the reduction, which means students from the poorest families will be ÂŁ125 out of pocket each month, is due to the fall in the value of maintenance loans, which students take out to cover their living costs. .
The problem: maintenance loans are adjusted according to inflation forecasts rather than inflation itself, which has been much higher than expected this year.
Here’s the full story, from our education correspondent Sally Weale.
UK business confidence falls as outlook darkens
UK business confidence has weakened as bosses fear a looming recession as inflation continues to dominate the economy.
The Confederation of British Industry reports that optimism fell in the services sector for the third consecutive quarter, with professional and business services firms particularly gloomy.
With rising costs, the company’s profits are hit, they say.
Charlotte Dendy, head of economic surveys at the CBI, said businesses also want to see more pro-growth policies from the government:
“Strong cost and price pressures continue to hurt service companies, hurting optimism and investment intentions and impacting profitability.
“While businesses welcomed aspects of the Autumn Statement, the sector is looking to longer-term measures from government to stimulate business investment and strengthen confidence towards 2023 and beyond. In particular, businesses want for the government to focus on growth by fighting inflation and recession together.
An independent Lloyds Bank survey found business confidence is now at its lowest since February 2021.
UK business confidence fell in two separate surveys, reflecting a darkening economic outlook marked by recession and lingering inflation https://t.co/Tg8WVZBQtH
— Bloomberg (@business) November 30, 2022
Rising food prices hit the poorest unfairly
Rising food prices hit the poorest hardest, as they spend a greater proportion of their income on basic goods such as food and energy.
They could also spur the Bank of England to raise interest rates again at its next meeting in mid-December.
This would be another blow to many households, raising the cost of credit and therefore borrowing as the BoE tries to squeeze inflationary pressures.
Victoria Scholar, Head of Investment at Interactive Investor, tells us:
BRC-Nielsen’s IQ shop price index points to record highs across the board as rising costs across the board, from wages to energy and agriculture, are passed on to consumers in terms of higher prices, especially for meat, eggs and dairy.
Rising prices of essential foods are adding to the cost of living crisis, unfairly affecting those at the bottom of the income spectrum.
Families will be forced to make tough spending decisions this festive season, with many opting for a pared down version of Christmas this year.
The Bank of England continues to fight inflation, with another hike expected at its next meeting in…