ALBAWABA – Despite the significant drop in inflation in October, residents of the United Kingdom (UK) still have to endure the rising costs of basic consumer goods, as Bloomberg’s monthly UK breakfast index remains significantly high.
The average cost of ingredients for a full English breakfast is more than 7 percent higher than a year earlier, according to Bloomberg.
The prices of most of the components actually rose in October, while only two ingredients became cheaper, coffee and butter.
The UK breakfast index uses product sizes provided by the Office for National Statistics (ONS) to crunch the price of sausages, bacon, eggs, bread, butter, tomatoes, mushrooms, milk, tea and coffee. And it is supposed to give a taste of the real-world impact of food costs and inflation on British households.
“Consumers are not out of the woods yet,” said Lisa Hooker, industry leader for consumer markets at PricewaterhouseCoopers LLP. “The recovery in consumer sentiment we saw earlier in the year has flatlined over the summer, and is reversing among all but the oldest and most affluent demographic groups.”
ONS data showed eggs rose more than 16 percent in price from a year earlier, while bread, sausages, bacon and tea bags all posted double-digit increases, Bloomberg reported. Meanwhile, the total cost to buy all the ingredients held flat in October at £35.92 ($44.70), near the highest on record, as it takes time for lower food inflation to impact shopping baskets.
The UK breakfast index gauges the prices of the ingredients of a full English breakfast - Shutterstock
Two of the UK’s largest supermarkets, Tesco Plc and J Sainsbury Plc, have raised guidance in a sign that the consumer may be more resilient than expected.
In the meantime, grocers told Bloomberg they’re doing their best to pass on lower prices to consumers especially across basic items including pasta and cheese, while juggling higher business costs.
Figures from the ONS’s Consumer Prices Index on Wednesday showed the pace of food inflation slowed to 10.1 percent in October from 12.3 percent in September.
Broader UK inflation also tumbled to the lowest in two years at 4.6 percent, meaning Sunak has hit one of his key pledges ahead of an expected general election next year.
However, disposable income for the average household is down 10 percent compared with two years ago, according to a statement by Asda stores, carried by Bloomberg.
More than a third of shoppers are planning to spend less on gifts this Christmas, according to KPMG, and they’re stepping up their reliance on buy-now-pay-later funding, Bloomberg reported.
On the other hand, some 2 million households missed essential bill payments in the month to October 9 due to financial pressures, according to consumer magazine Which.
