Soaring food prices put Brexit squeeze on millions in Christmas run-up

NIcholas Cecil, Jonathon Prynn
Food and soft drink prices jumped by 4.1 per cent in the year to October: Shutterstock / nito

Food prices are soaring at their fastest rate for more than four years amid a Brexit financial squeeze on millions of households in the run-up to the festive season.

Food and soft drink prices jumped by 4.1 per cent in the year to October — the highest since September 2013.

Fruit and vegetables were the fastest rising grocery category with rises of 3.1 per cent and 2.6 per cent respectively in October alone.

A detailed breakdown of the ONS figures shows that some staples are now rising in price by double-digit annual increases.

They include pasta, fish, yoghurt, sugar, coffee and butter, which was 22.5 per cent more expensive in October than a year ago.

The overall rate of inflation, as measured by the Consumer Prices Index, was slightly below City expectations and unchanged at three per cent following a drop in fuel costs.

But inflation is almost certainly still outstripping wage rises for millions of families for an eighth month in a row.

Richard Lim, chief executive of Retail Economics, said: “The persistent erosion of spending power over the last few months is beginning to take its toll on shoppers who are now tightening their belts in the run-up to Christmas.”

Tom Selby, senior analyst at AJ Bell, added: “UK household finances are being squeezed by a triple whammy of stubborn inflation, weak wage growth and higher debt costs in the form of rising interest rates.

"UK retailers are likely to feel the pressure if consumers are forced to reign in their spending in the crucial Christmas trading period.”

Liberal Democrat leader Sir Vince Cable said: “Millions of families will find their budgets are even tighter this Christmas. This should serve as a sharp reminder to MPs debating Brexit today that people’s living standards are at stake.”

A Treasury spokesman said: “We understand that people are concerned about increases in every-day costs.

"That’s why we have cut taxes and introduced the National Living Wage, which has lifted the wages of the lowest paid by over six per cent above inflation. It’s also why we are bringing in an energy cap to help people with the cost of household bills.”

The rise in inflation was triggered by the Brexit vote in June 2016 which sent the value of the pound plummeting, pushing up the cost of imports.

Ahead of the debate on the EU Withdrawal Bill, the Commons Public Accounts Committee raised the alarm over the dangers of a bungled Brexit, warning that fruit and vegetables could be left to rot on stranded lorries at Britain’s borders.

The MPs said that failing to introduce a new customs system, if needed, by the date of Brexit in 2019 would be “catastrophic”, with the risk of huge disruption for businesses.

The committee said that the number of customs declarations which HM Revenue and Customs must process each year could rise from 55 million to 255 million after the UK’s departure from the EU.

But HMRC does not yet have the funding to increase the capacity of its new Customs Declaration Service to deal with the consequences of Brexit.