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UK inflation: Price rises slow but remain close to 40-year high

BBC



Prices for olive oil, sugar and low-fat milk have surged with food costs continuing to fuel inflation in the UK.


Food inflation is at a 45-year high, with a supermarket boss warning that grocery prices will remain elevated this year.


Overall UK price inflation fell for the third month in a row to 10.1% in the year to January from 10.5% in December.


The biggest factors in the rate slowing were decreases in fuel prices and the cost of dining out.


To calculate inflation, which measures the increase in the price of something over time, the Office for National Statistics (ONS) keeps track of the prices of hundreds of everyday items.


If it falls, it does not mean the prices of goods are going down, it just means prices are rising more slowly.


Many analysts believe inflation will continue to fall, although it is still currently five times the Bank of England's target of 2%.


Grocery prices are one of the main drivers fuelling overall inflation, and were up 16.7% on the year to January.


Olive oil, sugar and low-fat milk prices have all increased by more than 40% in that time.


Matt Hood, managing director of Co-op Food, which has more than 2,500 UK stores, said prices continued to rise in January as costs for grocers did, making it "incredibly tough".


"Inflation is the thing that keeps us up at night," he told the BBC's Today programme.


"Believe it or not we as retailers are trying our hardest not to flow it all through to our customers."


Heatwaves hit olive oil production


Both food and energy bills have been rising following Russia's invasion of Ukraine almost a year ago, with supplies of both commodities being disrupted.


But in the case of olive oil, prices have been higher in recent months largely due to summer heatwaves hitting crops in Spain, a huge exporter of the product.


Kyle Holland, oils analyst at data firm Mintec, said production in Spain was down to 720,000 metric tonnes, from the usual 1.5 million.


"When there is not enough rain, [olive trees] cannot produce any olives. A lot of trees have not produced enough. It's a very steep decline," he said.

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