Rising food costs are putting pressure on UK households' finances
The Office for National Statistics (ONS) published new research on the 17th of September, shedding light on the current state of the UK economy. The report comes at a time when many families are struggling with the cost of living, according to Kris Hamer, director of insight at the British Retail Consortium (BRC).
Analysts believe that the Bank of England (BoE) will hold rates at 4% as inflation remains above their 2% target. This means that mortgage pressures are expected to persist for homeowners and buyers, with relief from persistently elevated fixed mortgage rates not imminent.
The surge in food prices, which has been attributed to recent domestic policy decisions, has been a significant factor in the rising cost of living. Products including beef, butter, milk, and chocolate experienced a particularly steep increase. This has led businesses to warn that these higher costs are being passed on to consumers.
Inflation is unlikely to return to the 2% target this year, which has prompted economists to predict that the Autumn budget will delay any interest rate cuts by the BoE. Markets anticipate another interest rate cut before the end of the year, but are waiting for clarity on the Chancellor's fiscal plans.
In related news, over £1.1 billion has been announced for UK coastal towns and cities to help alleviate some of the economic pressures. Chancellor Rachel Reeves acknowledged that families are finding it tough and pledged to bring costs down and provide support.
However, policymakers are expected to be cautious due to volatile global conditions and shifting domestic policy. They are keen to see a stable downward inflation trend, as this is critical to unlocking broader activity in various sectors.
The predicted BoE cuts could act as a spark, but for now, only the most agile investors may find opportunities in a cooling market. Investors and developers in sectors like co-living, build-to-rent, and storage are watching closely for a stable downward inflation trend.
In other news, the average wage grew by 4.7% between May and July this year. However, this growth has not been enough to offset the impact of inflation, as headline inflation remained unchanged at 3.8% from July. Energy prices are due to increase by 2% from the beginning of next month, which could further exacerbate the cost of living crisis.
Research shows that tall buildings on narrow streets trap air pollution, adding another layer of concern to the economic and cost of living challenges. The responsibility for publishing research activities about the rise in food prices in the UK in 2025 lies with the national statistics authority, the Office for National Statistics (ONS).
Daniel Austin, CEO and co-founder of ASK Partners, predicts a bumpy and uncertain road ahead due to unchanged UK inflation. He warns that this could lead to a prolonged period of economic instability.
In conclusion, the UK economy faces significant challenges as inflation remains high and the cost of living soars. The Autumn budget and the BoE's monetary policy decisions will be crucial in determining the future direction of the economy. It is a time of uncertainty, but also a time for policymakers to take decisive action to support families and businesses.
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