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Food and drink prices have jumped sharply once again as inflation in the sector continued to race ahead of the UK headline rate.
Overall inflation hit 10.1% in the 12 months to July, up from 9.4% last month, according to the latest data from the Office for National Statistics (ONS). It is the first time the figure has passed double digits since 1982.
The headline rate was higher than expected by economists, with the surging cost of food driving the increase.
Food and non-alcoholic beverage prices rose 2.3% between June and July, taking the sector’s annual inflation rate to 12.7%, up from 9.8% in June.
This month’s rise in prices follows three months of increases - of between 1.2% and 1.5% - and is the highest monthly increase since May 2001. The annual rate was last higher in August 2008, during the credit crunch, when inflation for food and non-alcoholic beverages was 13.2%.
All 11 food and drink categories measured by the ONS contributed to the change in the annual inflation rate, where prices overall rose this year but fell a year ago.
Bread, cereals, milk, cheese and eggs were singled out as making the biggest contribution to soaring prices, while cooked ham and bacon, vegetables, sugar, jam, syrups, chocolate and confectionery also made smaller contributions.
Alcoholic beverage and tobacco also rose 5.4% in the year to July, compared with 4.6% in June.
ONS chief economist Grant Fitzner also pointed to price rises in other staple items, such as pet food, toilet rolls, toothbrushes and deodorants.
“A wide range or price rises drove inflation up again this month,” he said. “Food prices rose notably, particularly bakery products, dairy, meat and vegetables, which was also reflected in higher takeaway prices.”
He added: “Driven by higher demand, the price for package holidays rose, after falling at the same time last year while air fares also increased.
“The cost of both raw materials and goods leaving factories continued to rise, driven by the price of metals and food respectively.”
Transport costs were another big contributing factor to July’s rise, with air fares and international rail tickets particularly increasing, while fuel prices and energy costs also continued to rise.
Morning update
Sales at Carlsberg have soared past pre-pandemic levels as the ongoing recovery in the on-trade helped the Danish brewer’s first-half performance.
But CEO Cees ’t Hart warned that surging inflation would continue to be a challenge for the rest of the year.
Organic sales grew by 20.7% in the half and by 18.7% in the second quarter, with overall revenue growth for the first six months of 2021 of 23.6% to 35.5bn Danish krone (£4bn) thanks to positive current translation, price increases and channel and country mix.
Volumes jumped 8.9% in the half driven by a strong performance in Western Europe and Asia, offsetting the impact of the conflict in Ukraine.
Strong organic operating profit growth of 31.8% reflected the on-trade recovery and the performance in Asia, but was partly offset by higher commodity prices and energy costs.
Reported operating profits increased 35.9% to 6.4bn Danish krone (£723m), while the impact of 10.4bn Danish krone of writedowns in Russia, Ukraine and Central and Eastern Europe pushed the group to a loss of 5.3bn Danish krone.
Hart said: “We’re very satisfied with the strong set of results for the first half year in light of the severe challenges stemming from the war in Ukraine, rising commodity prices and energy costs, and the pandemic. Despite these challenges, the Carlsberg Group’s half-year results are now well ahead of pre-pandemic levels.
“Global uncertainty remains high, with the increasing input cost pressure a particular challenge for us in the coming quarters. In this environment, we’ll continue to seek the right balance between mitigating the short-term challenges and investing in the long-term opportunities behind our SAIL’27 priorities to deliver on our ambitions for top and bottom-line growth. Despite challenging market conditions, we’re staying the course.”
Irish group Glanbia has reported a 38.5% jump in first-half revenues to €2.8bn thanks to price rises and favourable currency translation.
Its performance nutrition division increased branded like-for-like volumes by 1.9% and pushed up prices by 13.9% in the six months to 2 July, while the other half of the business - Nutritional Solutions - posted a 1.6% increase in like-for-like volumes and 17.9% rise in pricing.
Group EBITA before exceptional costs rose 7.4% to €171.7m.
Glanbia increased its interim dividend by 10% as a result of the performance.
MD Siobhán Talbot said: “I am pleased to report that half year 2022 results have exceeded our plans, demonstrating the impact of a series of actions implemented since the latter part of last year in response to unprecedented inflation.
“Revenues grew strongly with significant pricing initiatives and volume growth in all business segments in the period.”
She added: “We will continue to monitor inflationary trends into the second half of the year but are confident that further pricing action and operational efficiencies will deliver improving margins and strong year-on-year EBITA growth.”
The FTSE 100 kept its head above water despite the double-digit rise in inflation, nudging up 0.1% to 7,541.98pts.
Carlsberg shares are up 2.9% to 987.20 Danish krone, while Glanbia rose 0.7% to €12.32.
Other early risers included McBride, up 3.8% to 21.8p, Premier Foods, up 1.8% to 117.9p, and Devro, up 1.3% to 198.8p.
Fallers so far included Science in Sport, down 4.8% to 30p, Haleon, down 3.2% to 260.5p, and THG, down 1% to 69.5p.
Yesterday in the City
The FTSE 100 closed at its highest level for more than two months, climbing 0.4% to 7,540.45pts.
Riser yesterday included McBride, up 6.7% to 20.8p, Pets at Home, up 4.2% to 381p, and Delivery Hero, up 3.6% to €51.76.
Losers included Virgin Wines UK, HelloFresh and Finsbury Food Group, down 6.4% to 66p, 1.6% to €30.32 and 2.6% to 69.2p respectively.
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