(Bloomberg) — Prime Minister Rishi Sunak declared victory this week in the UK’s battle to halve inflation, yet many families are still feeling the pinch — including those trying to lift their morale with a traditional cooked breakfast.
The average cost of ingredients for a full English is more than 7% higher than a year earlier, according to Bloomberg’s monthly Breakfast Index. Most components of a fry-up rose in price in October from a year earlier, while only two — coffee and butter — became slightly cheaper.
The index uses product sizes provided by the Office for National Statistics to crunch the price of sausages, bacon, eggs, bread, butter, tomatoes, mushrooms, milk, tea and coffee. It gives a taste of the real-world impact of food costs 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.”
Eggs rose more than 16% in price from a year earlier, while bread, sausages, bacon and tea bags all posted double-digit increases.
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.
International consumer goods groups such as Nestle and Danone have highlighted pressures on costs like robusta coffee, energy and dairy.
“Inflation is not over,” Nestle Chief Financial Officer Francois-Xavier Roger told analysts last month. “We still have salary and wage inflation.”
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. Grocers say 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.
“There is a lot of inflationary pressure in the industry that isn’t going to go away – labor costs are well up, energy costs are well up,” Sainsbury CEO Simon Roberts said earlier in November.
The latest figures from the ONS’s Consumer Prices Index on Wednesday showed the pace of food inflation slowed to 10.1% in October from 12.3% a month earlier. The UK’s broader inflation figure tumbled to the lowest in two years at 4.6%, meaning Sunak has hit one of his key pledges ahead of an expected general election next year.
But the mood among consumers isn’t so jubilant. Disposable income for the average household is down 10% compared with two years ago, Asda said this week. 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.
Read More: Brits to Pile on Christmas Debt With Buy Now Pay Later Deals
Around 2 million households missed essential bill payments in the month to Oct. 9 due to financial pressures, according to consumer magazine Which.
“With Christmas fast approaching, this reality will only become increasingly bleak for those already struggling to make ends meet,” said Rocio Concha, director of policy and advocacy at Which, adding that supermarkets should stock budget items in their convenience stores as well as in larger shops.
The cost of ingredients also slightly rose from a month earlier as coffee, butter and bacon all grew more expensive. Only eggs, tea bags and sausages fell in price.
This story was produced with the assistance of Bloomberg Automation.
—With assistance from Leonid Bershidsky.
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