City snapshot: Inflation eases as crumpet and meat prices fall

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Inflation has continued to ease in the UK as the price of certain food products started to fall.

Bakery items such as chocolate biscuits and crumpets saw prices come down between Feburary and March, while meat prices - in particular pork products - fell by 0.5%, according to the latest data released by the Office for National Statistics (ONS) this morning.

Bread and cereals prices also rose less sharply, coming down from a 2.2% monthly increase to a 0.2% jump.

It resulted in a rise in prices across food and non-alcoholic beverages in the year to March of 4%, compared with 5% in February.

It’s the lowest annual rate in the sector since November 2021 and represented the 12th month in a row of easing inflation.

Alcoholic beverages and tobacco prices rose 12.1% in the year, compared with 11.9% recorded in February.

The slowdown in food and drink contributed to a drop in the overal headline rate of UK inflation from 3.4% to 3.2% in March.

ONS chief economist Grant Fitzner said inflation was at its lowest annual level for two-and-a-half years.

“Once again, food prices were the main reason for the fall, with prices rising by less than we saw a year ago,” he added.

“Similarly to last month, we saw a partial offset from rising fuel prices.”

Food and Drink Federation CEO Karen Betts said falling food inflation was “good news for consumers”.

But she warned that risks remained, including increasing extreme weather hitting agriculture globally. 

“This has been very visible in the UK in recent weeks with this winter’s wet weather causing widespread flooding on farmland,” Betts said. “Inevitably, lower or poorer crop yields caused by bad weather have the ability to impact food prices.” 

Morning update

Just Eat Takeaway hailed a good start to its new financial year thanks to accelerating growth in the UK and Ireland.

Gross transaction value (GTV) in the UK and Irish markets jumped by 11% to €1.7bn in the first quarter of 2024, with orders also up 1% year on year.

It was the only region that Just Eat managed to grow orders, with Northern Europe, Southern Europe and North America all in decline.

Just Eat’s overall GTV growth was within its guidance range of 2% to 6% year on year at 3%, when excluding North America from the figures. A 11% fall in the region, however, pulled down total GTV by -2% for the quarter to €6.5bn.

The group reiterated its adjusted EBITDA guidance for the year of around €450m.

CEO Jitse Groen said: “Just Eat Takeaway.com started the year well, with the acceleration of GTV growth in UK and Ireland and our continued momentum in Northern Europe in Q1 2024.

“We are excited that the investments in our business are paying off, and we are looking forward to the rest of the year.”

The FTSE 100 is up 0.1% this morning to 7,827.16pts following yesterday’s fall.

Shares in Just Eat crashed 5.2% to 1,134p following the release of the Q1 trading update, with the stock now down 19% over the past year.

Other fallers this morning included PZ Cussons, down 1.2% to 81.9p and Britvic, down 1.2% to 818p.

Virgin Wines leads the early risers, climbing 5.1%to 49.9p, while Glanbia is up 3.4% to €18.10, Hilton Food Group is up 2.3% to 899p and McBride is up 2% to 103.5p.

Yesterday in the City

The FTSE 100 suffered its worst day in nine months as global markets fretted over continued high interest rates and UK wages rose faster than expected. London’s blue-chip index slumped 1.8% to 7,820.4p.

Shares in B&M sank 2.1% to 500p as the discounter warned its growth had slowed in the final quarter of the financial year.

DS Smith shares dipped back 3.7% to 394.6p as the packaging giant agreed a £5.8bn deal with US-based International Paper to end a takeover battle.

Big fallers yesterday included the tech stocks Just Eat Takeaway, Ocado and Deliveroo, falling 4.8% to 1,196p, 4.1% to 349p and 3.9% to 125.1p respectively.

The few risers included Glanbia, up 3.3% to €17.45, and Nichols, up 0.8% to 978p.