Acknowledging the headlines hailing inflation hitting a 30-year high in January, Black challenged the prevailing narrative warning of an impending 'cost of living' crisis. He was concerned such coverage 'could be self-fulfilling in terms of unnecessarily depressing consumer confidence and demand should it take hold'.
The Consumer Price Index plus Housing costs (CPIH) rose 10 basis points to 4.9% in the year to January 2022.
Black recognised living standards would fall in the first half of the current year, but said prices 'are set to peak by late spring', in line with his previous prediction. The rising cost of living would be offset by wages rising by an estimated 5% and a rise in the Living Wage of 6.6% in April.
Biggest inflation in oils and fats
Based on ONS figures, inflation across all the food categories were higher year-on-year, led by oils and fats (up 16%). Fruit was up 7% and coffee, tea and cocoa rose by 5%. Overall food and non-alcoholic drinks prices were up 4.3% according to ONS - the largest increase since September 2013.
"Managing wholesale inflation is a new experience for many executives in the British food scene; supply and retail. Understanding how the shopper behaves is not easily learned on the job. We sense that overall, though, with wages and salaries rising just behind CPIH, and a strong savings ratio, that most households can afford their groceries and so evidence of trading down ... is limited."
Supply chain profit margins had been especially squeezed by rising labour and energy costs, Black said.
Commenting on the ONS numbers, chief executive of the Food and Drink Federation Karen Betts said: “Today's continuing rise in the price of everyday food and drink is worrying - particularly for lower income households. Food and drink manufacturers are working hard to keep prices down but are being hit hard by rising energy, ingredient and logistics costs, which for the moment show no signs of abating, alongside dealing with acute labour shortages.
“It's becoming increasingly difficult for companies - large and small - to remain competitive and upcoming regulation is compounding the situation. This puts a premium on good collaboration between government and industry to guarantee that planned regulation is successful and does not place unnecessary burdens on businesses at an already challenging time.”
Emma McClarkin, chief executive of the British Beer and Pub Association said: “The inflation figures published today by the ONS highlight further steep financial challenges the pub and brewing sector are facing following another devastating winter. Rising inflation coincides with the sector experiencing record levels of debt and facing increased costs across the board from energy through to raw materials, as well as supply chain difficulties.
“We are urging the Government to heed the calls of our Long Live The Local campaign that seeks to support the sector for the long term by extending the current lower level of VAT, lowering beer duty, and introduce business rates reform that reduces the disproportionate burden paid by pubs to help them recover and fire on the UK economy.”