Bread inflation rises YOY to 4.1%

13 February, 2013

Bread and cereals inflation rises to 4.1%

Inflation is expected to remain a resilient feature of the bread and cereals category through to the summer at least, a City analyst has warned.

Shore Capital said the year-on-year inflation rate of bread goods and cereals rose to 4.1% during January, following what the firm described as “a surprise dip” to 3.2% for the category in December, with the annual rate of food inflation in the UK increasing to 4.5%.

It comes as the Office of National Statistics (ONS) published the latest UK consumer price inflation rate for last month, revealing the annual level stood at 2.7% as of January, remaining unchanged for the last four months.

The food and non-alcoholic beverages was earmarked as one of the biggest contributors to the level of inflation, second to alcohol and tobacco, with the ONS highlighting the upward pressure from bread and cereals in addition to fruit and vegetables.

Analysts at Shore Capital said: “We have been writing for some time now of the upward pressure from rising food inflation, with concerns driven by the poor 2012 northern hemisphere harvest on soft commodity prices, and the impact as it feeds through the supply chain into bread, dairy and meat production.

“However, such concerns have been compounded by recent sterling weakness, which is feeding through into the cost of imported goods, notably in fruit, vegetables and bread, according to the ONS report.”

The firm added that a further increase in food inflation is likely to put further pressure on UK food industry volumes.





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