Food prices maintain 40-year high

While the total rate of inflation fell from 10.7% in November to 10.5% in December, food prices continued to increase year-on-year – up 16.8% last month from 16.4% in November.

Food prices are now at their highest level since 1977, with milk, cheese and eggs category reporting the largest increase – up 30.2% compared with the previous year.

The price of oils and fats remained significantly high – up 29.3% year-on-year from 29.1% in November – as prices of sugar, jam, syrups, chocolate and confectionery jumped to 13.3% after they had dipped to 9.6% the previous month.

Price decreases​

However, not all sectors of the food industry continued to experience price rises. Bread and cereals dropped to 15.1% from 16.6% the month prior, while meat also saw a similar drop to 15.5% from 16.6%.

Commenting on the latest figures from the ONS, Walid Koudmani – chief market analyst at online investment platform XTB.com – said: “While British inflation showed signs of slowing last month after reaching a 41-year high in October, the pressure continues to be felt by consumers as food and drink prices rose at the fastest pace since 1977. ​

“While this drop was in line with expectations and may give the Bank of England some signs that price pressures are easing, it is unlikely to be enough to cause a significant shift in the bank's approach as it closely monitors the macro situation. Furthermore, if inflation does not show significant signs of change, the disparity between central bank approaches could become even more apparent which could greatly impact the Pound.”​

Other sectors ​

In other sectors, housing, water, electricity, gas and other fuels maintained a 26.6% change over the past three months (compared with the same period the previous year).

The alcoholic beverages and tobacco sector reported prices were up 3.7% in December compared with 2021, down from 4.1% in November.

Restaurant and hotel prices saw the largest amount of growth in December, with consumers paying 11.3% more than the prior compared to an increase 10.2% in November.

Meanwhile, strong sales of dairy, meat and alcoholic beverages saw exports of Irish food and drink grow to €16.7bn (£14.8bn) in 2022,​​ according to Bord Bia.