Cost of Christmas Dinner Shows Britain’s Inflation-Crisis Easing
Published on Bloomberg
- Price rises just 5% this year, retail researcher Assosia finds
- Increase well below the food inflation peak earlier this year
The price of Christmas dinner is bringing some relief for British shoppers in the latest sign that the shock to food prices is beginning to unwind.
The price of seven festive staples including turkey, parsnips and Brussels sprouts has risen by 5% over the past year, according to Assosia data provided to Bloomberg. That is well below the near 20% peak of food inflation seen in March and under the current rate of wage growth.
It suggests that the pressure on household finances from the worst cost-of-living crisis in decades is easing with wage increases now outstripping inflation. Official figures on Wednesday could show that food inflation fell to single digits for the first time since June last year.
The war in Ukraine sent food inflation soaring after disrupting the supply of grains and pushing up costs for farmers, including fuel, feed and fertilizer.
Assosia, a retail research firm, looked at the cost of a frozen medium Turkey crown, Maris Piper potatoes, Brussels sprouts, parsnips, gravy granules, cranberry sauce and Christmas pudding on Dec. 11 in 2022 and 2023. The data are based on the average pre-promotion price across the “big four” supermarkets — Asda, Morrisons, Sainsbury’s and Tesco.
The cost of Christmas pudding and gravy granules rose by the most at 17% year each. Turkey climbed 3.8%, Brussels sprouts increased 0.8% and parsnips rose by just 0.4%, while potatoes and cranberry sauce fell in price.
Economists expect grocery bills inflation to ease further in the coming months as the shocks to energy and food prices unwind.
Sanjay Raja, chief UK economist at Deutsche Bank, said more retailers were “pushing through promotions ahead of Christmas.”
“Food disinflation is in full effect in the UK,” he said. “There’s still plenty of room to go before price rises look more normal – at least on an annual basis.”
Tomorrow’s figures are expected to show overall inflation cooling to 4.3% in November from 4.6% the previous month. While it would be the lowest annual inflation rate in more than two years, the Bank of England doesn’t expect a return to the 2% target until the end of 2025.
Abbas Khan, economist at Barclays, said that a drop in food producer price inflation suggests a “stronger pace of food disinflation in November.”
“We expect an easing in both headline and core CPI inflation in November, with small negative contributions across services, core-goods, food and energy,” he said.
Published on Bloomberg.com, 19th December 2023