Veg shortages drive surprise jump in UK inflation

The cost of living unexpectedly increased last month after shortages of salad and vegetables helped push food prices to their highest for 45 years.

Alcohol prices in restaurants and pubs also drove up costs for households as inflation jumped to 10.4% in the year to February from 10.1% in January.

Clothing costs, particularly for children and women, rose last month but fuel prices continued to fall.

The surprise figures come ahead of a decision on interest rates on Thursday.

The UK's central bank, the Bank of England, will decide whether to increase, reduce or maintain interest rates at their current level as it continues its battle to ease inflation.

The Bank has put up rates 10 times in a row since December 2021, as it seeks to make borrowing money more expensive and encourage people to spend less, hopefully stopping prices rising as quickly.

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.

One of the main drivers behind February's figure was the continued rise in food costs, which came at a time when supermarkets were experiencing shortages of some salad items and vegetables.

Tomatoes, peppers and cucumbers were among vegetables in scarce supply, largely because of extreme weather affecting harvests in Spain and North Africa.

The shortages were also compounded by high energy prices hitting UK growers, as well as issues with supply chains.

Grant Fitzner, chief economist for the Office for National Statistics (ONS), said higher food prices were driven by "particular increases for some salad and vegetable items as high energy costs and bad weather across parts of Europe led to shortages and rationing".

He told the BBC's Today programme that what experts "hadn't been expecting" was "an increase in the price of alcohol in pubs and restaurants in February after some discounting" in January.

But Mr Fitzner said the longer term outlook for the UK was "not quite so bleak", with expectations that falling energy prices would ease inflation this summer.

Until February inflation had fallen for three months in a row, but the surprise jump shows cost-of-living pressures on households and businesses are far from over.

Food inflation hit 18.2% in the year to February, with the prices of milk, olive oil, sugar and eggs continuing to climb alongside the more recent rises in vegetable prices.

Minette Batters, president of the National Farmers Union (NFU), told the BBC that food prices had risen partly because of the "extraordinary costs" farmers were facing, but also because there were fewer growers and shortages had emerged.

The inflation numbers are an unpleasant surprise for the markets, forecasters, the Bank of England and those in government hoping for a smooth path to their own target of halving it by the end of the year.

UK inflation in February will be the highest in the G7, leaving us as the only country still in double digits. But this will come as little surprise to consumers at the sharp end of relentlessly rising food prices and the recent vegetable shortages.

Inflation will still fall, it has to mathematically, as the biggest single component over the past years, domestic energy bills, rise by a smaller amount than in 2022. But it promises to be a bumpier ride than hoped.

All this will complicate matters for the Bank of England, which will decide on whether to raise rates tomorrow. The Bank, and its US counterpart the Federal Reserve later tonight, will be balancing concerns about stubborn inflation with fears over global financial stability. That balancing act just got more difficult.

Chancellor Jeremy Hunt said falling inflation rates were "not inevitable".

"We recognise just how tough things are for families across the country, so as we work towards getting inflation under control we will help families with cost-of-living support worth £3,300 on average per household this year."

Labour Shadow Chancellor Rachel Reeves criticised the government saying "nothing" was working better than it did before the Conservatives took office 13 years ago.

Yael Selfin, chief economist at KPMG, said the increase in inflation complicated the Bank of England's decision on interest rates.

She said the Bank of England may choose to increase rates from the current level of 4%, but added any rise could be the last.