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Gloucestershire Business News

Price rises slow but remain close to 40-year high

Despite a drop in overall UK price inflation to 10.1% for the month from 10.5% in December, food costs remain at a 45-year high.

Food inflation remained high at 16.7% in the year to January, a slight drop from 16.8% in December, the BBC reported.

Grocery prices are one of the main drivers fuelling overall inflation, along with energy bills, according to the Office for National Statistics (ONS), which published the data.

The price of olive oil, sugar and low-fat milk all increased by more than 40% in the year to January, while cheese prices rose more than 30% in the year to January, and other staples butter and eggs were up by over 20%.

The fall in overall inflation, which was the third monthly decrease in a row, was largely due to the price of fuel and cost of restaurants and hotels slowing, the ONS said.

But this was offset by rising prices of alcohol and tobacco.

Some analysts have said the cost of living may now be beginning to ease after inflation hit a peak in October.

However at 10.1%, the rate of price rises is still way above the 2% target the Bank of England is charged with meeting.

Pay, excluding bonuses, increased at an annual pace of 6.7% between October and December 2022. But it is failing to keep up with the cost of living as when adjusted for inflation, regular pay fell by 2.5%.

Alpesh Paleja, CBI lead economist, said: "Another fall in inflation over January suggests that the tide is turning on price pressures. But with inflation and pipeline cost pressures set to remain high this year, households and businesses are likely to feel the pain for a while yet. In particular, the continued strength in more domestic measures of inflation will keep alarm bells ringing at the Bank of England.

"Given the central role played by energy prices in driving inflation up over the past year, the government must use the upcoming Budget to deliver a home-grown, secure, low-cost and low-carbon energy system.

"Measures that boost green investment will not only help reduce exposure to volatility in global energy prices, but also deliver a sustainable path to reaching Net Zero."

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