The global cost of living squeeze has eased, as food inflation across rich nations drops to its lowest level since before Russia’s full-scale invasion of Ukraine.
After two years of surging prices, the annual rise in consumer food prices across 38 industrialised countries fell to 5.3% in February, the Financial Times reports, citing new OECD data expected today.
That’s down from 6.2% per cent in January, and well below a peak of 16.2% in November 2022, according to the latest OECD data.
Many global food commodities, such as cereals and dairy products, have been easing in recent months, after spiking in 2022, which is now feeding through to lower inflation in the shops. In the UK, food price inflation hit a two-year low last week.
The worst of high food inflation is now behind us, according to Carlos Mera, head of agricultural commodities at Rabobank, who told the FT: “Agricultural commodity prices have dropped significantly in the last two years, since the peak in prices that followed the invasion of Ukraine, and this is acting as a disinflationary force even at [the] retail level.”
Falling inflation doesn’t mean prices are falling, though; they’re rising at a slower rate than before.
In many advanced economies, food inflation has dropped to around half its recent peak.
The OECD’s inflation gauge comes as financial markets reassess how quickly central banks will be able to cut interest rates this year.In America, the economy is showing more vigour than expected, undermining expectations that the US Federal Reserve will cut borrowing costs three times this year.
Rising oil prices this year had also added to inflationary pressures. But this morning, Brent crude has dropped 1.7% to $89.60 per barrel, having hit a five-month high over $91 last week.
Meanwhile, hopes are building that the UK economy is pulling out of recession.
Two industry surveys suggest that UK growth has reached a “turning point".
The accounting and business advisory firm BDO reports that output from UK businesses has risen for the second consecutive month to its highest level in nearly two years.
BDO’s Output Index, which tracks output across the services and manufacturing sectors – climbed to 102.39 in March, its highest reading since May 2022.
This, BDO says, shows a “robust recovery and a turning point for the UK economy”.
Kaley Crossthwaite, a partner at BDO, says: “Output reaching its highest point in nearly two years illustrates the UK’s robustness in the face of global economic adversities and is a big step towards economic stability and growth.
“For businesses, the main mood right now is cautious optimism – with drops in the employment and optimism Index showing that we’re not out of the woods just yet. All eyes are on the Bank of England, with an interest rate cut looking possible for June, as businesses hold out hope for a further recovery this year.”
Deloitte reports that sentiment among UK chief financial officers has risen for the third consecutive quarter, as bosses grow more optimistic about the prospects for their own businesses.
The proportion of CFOs reporting high or very high levels of uncertainty facing their businesses fell to 36% this quarter, Deloitte says, which is less than half the peak seen in mid-2022 (77%).
This takes uncertainty back to levels last seen in the summer of 2021 (35%), a time when national lockdown restrictions were ending.
The agenda
• 7am BST: German trade balance for February
• 8am BST: Philippines interest rate decision
• 9am BST: IMF to release Chapter 2 of its World Economic Outlook
• 3pm BST: Israel interest rate decision
We’ll be tracking all the main events throughout the day ...
|
People are poorer than at the last election and all Hunt can do is hope 
