The increase in food inflation will put further pressure on household budgets. PA
The increase in food inflation will put further pressure on household budgets. PA
The increase in food inflation will put further pressure on household budgets. PA
The increase in food inflation will put further pressure on household budgets. PA

World

UK

UK shop prices report record highs but peak still to come

Food inflation in supermarkets is currently at its highest rate since records began

Soraya Ebrahimi
Soraya Ebrahimi

February 01, 2023

  • English
  • Arabic

Inflation accelerated in January in the UK, sending shop prices to a record high, though experts warn the peak has yet to come.

Prices have increased 8 per cent since last January, up from 7.3 per cent in December and above the three-month average of 7.5 per cent, according to the British Retail Consortium-NielsenIQ Shop Price Index.

Overall food inflation reached the highest rate in the category on record, rising 13.8 per cent from 13.3 per cent in December.

Fresh food inflation also reached a record high due to increased production costs as well as elevated fruit and vegetable prices, accelerating to 15.7 per cent from 15 per cent in December.

Ambient food inflation saw the fastest increase on record as wholesale and bulk prices rose, particularly for sugar and alcohol, accelerating to 11.3 per cent from 11 per cent in December.

Meanwhile, clothing and footwear prices eased, allowing consumers to replenish their wardrobes during the January sales.

UK Chancellor says 'best tax cut right now is a cut in inflation' — video

“Retail prices rose in January as discounting slowed and retailers continued to face high input costs,” BRC chief executive Helen Dickinson said.

“With global food costs coming down from their 2022 high and the cost of oil falling, we expect to see some inflationary pressures easing.

“However, as retailers still face ongoing headwinds from rising energy bills and labour shortages, prices are yet to peak and will likely remain high in the near term as a result.”

Inflation around the world — in pictures

People queue to buy wheat flour at government-controlled prices in Islamabad. Pakistan's economy has been hit hard by a political crisis, as well as devastating floods and the global energy crisis, with the rupee plummeting and inflation at decades-high levels. AFP
People queue to buy wheat flour at government-controlled prices in Islamabad. Pakistan's economy has been hit hard by a political crisis, as well as devastating floods and the global energy crisis, with the rupee plummeting and inflation at decades-high levels. AFP
A market in Rio de Janeiro. Brazil's inflation ended 2022 with a sharp slowdown from double-digit peaks seen throughout the year. Reuters
A market in Rio de Janeiro. Brazil's inflation ended 2022 with a sharp slowdown from double-digit peaks seen throughout the year. Reuters
A market in Istanbul. Turkey's inflation at the end of 2022 stood at 64. 27 per cent, the country's Statistical Institute said, while the independent group of inflation researchers ENAG calculated it at 137. 55 per cent. EPA
A market in Istanbul. Turkey's inflation at the end of 2022 stood at 64. 27 per cent, the country's Statistical Institute said, while the independent group of inflation researchers ENAG calculated it at 137. 55 per cent. EPA
A Walmart in New Jersey. According to a poll, US Republicans and Democrats have distinct views of what’s most important for the government to address amid high inflation. More Republicans name gas and food prices, energy and immigration, while Democrats focus on health care, climate change and poverty. AP
A Walmart in New Jersey. According to a poll, US Republicans and Democrats have distinct views of what’s most important for the government to address amid high inflation. More Republicans name gas and food prices, energy and immigration, while Democrats focus on health care, climate change and poverty. AP
A used car sales lot in California. US Federal Reserve officials have indicated it’s possibly too early to declare victory over inflation. AFP
A used car sales lot in California. US Federal Reserve officials have indicated it’s possibly too early to declare victory over inflation. AFP
A person walks by a sign showing interest rates at a bank in New York. EPA
A person walks by a sign showing interest rates at a bank in New York. EPA
A woman walks with purchases past a store in Berlin. In December, consumer price growth across the Euro zone slowed to 9.2 per cent from 10.1 per cent a month earlier, Eurostat data showed last week. AP
A woman walks with purchases past a store in Berlin. In December, consumer price growth across the Euro zone slowed to 9.2 per cent from 10.1 per cent a month earlier, Eurostat data showed last week. AP
Workers sit in front of a banner reading "Stop the Inflation Monster" at the Burchardkai Container Terminal as they go on strike for higher wages at the harbour in Hamburg, Germany. Reuters
Workers sit in front of a banner reading "Stop the Inflation Monster" at the Burchardkai Container Terminal as they go on strike for higher wages at the harbour in Hamburg, Germany. Reuters
Price tags at a market in Nice, France. Reuters
Price tags at a market in Nice, France. Reuters
Commuters cross Waterloo Bridge in London. The British Retail Consortium said spending in store chains rose by 6.9 per cent in annual terms in December, but this was a long way off consumer price inflation, which hit 10.7 per cent in November. Reuters
Commuters cross Waterloo Bridge in London. The British Retail Consortium said spending in store chains rose by 6.9 per cent in annual terms in December, but this was a long way off consumer price inflation, which hit 10.7 per cent in November. Reuters
Jobseekers in Johannesburg. South Africa’s governing party wants the central bank’s mandate broadened to shore up the economy and promote employment in addition to its existing task of tackling inflation. Reuters
Jobseekers in Johannesburg. South Africa’s governing party wants the central bank’s mandate broadened to shore up the economy and promote employment in addition to its existing task of tackling inflation. Reuters
Social grant recipients stand in a queue outside a post office, as joblessness takes its toll in Meadowlands, South Africa. Reuters
Social grant recipients stand in a queue outside a post office, as joblessness takes its toll in Meadowlands, South Africa. Reuters

“Consumer demand is likely to be weak in the first quarter due to the impact of energy price increases and, for many, Christmas spending bills starting to arrive,” said Mike Watkins, head of retailer and business insight at NielsenIQ.

“So the increase in food inflation is going to put further pressure on household budgets and it’s unlikely that there will be any improvement in the consumer mindset around personal finances in the near term.

“With shoppers having less money to spend on discretionary retail having paid for their essential groceries, there will be little to stimulate demand across the non-food channels.”

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Company profile

Date started: 2015

Founder: John Tsioris and Ioanna Angelidaki

Based: Dubai

Sector: Online grocery delivery

Staff: 200

Funding: Undisclosed, but investors include the Jabbar Internet Group and Venture Friends

UAE currency: the story behind the money in your pockets
On Women's Day
more from Janine di Giovanni
While you're here
Groom and Two Brides

Director: Elie Semaan

Starring: Abdullah Boushehri, Laila Abdallah, Lulwa Almulla

Rating: 3/5

COMPANY PROFILE
Name: Kumulus Water
 
Started: 2021
 
Founders: Iheb Triki and Mohamed Ali Abid
 
Based: Tunisia 
 
Sector: Water technology 
 
Number of staff: 22 
 
Investment raised: $4 million 
Whiile you're here
While you're here
UAE currency: the story behind the money in your pockets
Cases of coronavirus in the GCC as of March 15

Saudi Arabia – 103 infected, 0 dead, 1 recovered

UAE – 86 infected, 0 dead, 23 recovered

Bahrain – 210 infected, 0 dead, 44 recovered

Kuwait – 104 infected, 0 dead, 5 recovered

Qatar – 337 infected, 0 dead, 4 recovered

Oman – 19 infected, 0 dead, 9 recovered

Traces%20of%20Enayat
%3Cp%3E%3Cstrong%3EAuthor%3A%3C%2Fstrong%3E%20Iman%20Mersal%3Cbr%3E%3Cstrong%3EPublisher%3A%3C%2Fstrong%3E%20And%20Other%20Stories%3Cbr%3E%3Cstrong%3EPages%3A%3C%2Fstrong%3E%20240%3C%2Fp%3E%0A
The%20specs
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3ESingle%20front-axle%20electric%20motor%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E218hp%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E330Nm%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3ESingle-speed%20automatic%3Cbr%3E%3Cstrong%3EMax%20touring%20range%3A%20%3C%2Fstrong%3E402km%20(claimed)%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh215%2C000%20(estimate)%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3ESeptember%3C%2Fp%3E%0A
Updated: February 01, 2023, 12:01 AM
InflationUK