Households feel food price pain

A painful rise in the cost of the weekly shop kept up the inflation pressure for struggling household budgets in November, giving more headaches for rate-setters at the Bank of England.

Rising food prices following sodden harvests over the summer offset relief for motorists from a sharp fall in petrol prices, keeping the Bank's preferred consumer prices index benchmark unchanged at 2.7 per cent in November. According to the central bank's latest forecasts, the CPI will remain above its 2 per cent target throughout 2013.

The price of everyday staples such as bread and vegetables is soaring, with food prices overall 3.9 per cent ahead of November last year following the worst wheat harvest in 25 years. Vegetables such as potatoes are up a stinging 8.1 per cent. The figures also took account of gas and electricity price rises for the first time with Scottish & Southern Energy's price rise, an effect which will worsen in December's inflation data.

The latest rise comes on top of the Chancellor's spending squeeze due to kick in next year, restraining increases in many benefits to 1 per cent. Osman Ismail, an economist at the Centre for Economics and Business Research, said: "The poorest will feel their disposable incomes squeezed especially tightly. Consumers will likely continue to see their spending power eroded by rising prices for quite some time, whether they are in work or out of work."

Economists also warned that stubbornly high inflation is tying the hands of Bank of England rate setters despite rising fears over the economy tumbling back into recession.

The cost of living looks set to resume its rise towards 3 per cent next year, adding to the jitters on the Bank's Monetary Policy Committee over extending its £375bn money-printing programme.

This comes despite warnings, not least from the Governor, Sir Mervyn King, that growth may fall back into negative territory for the October-December quarter.

IHS Global Insight's economist Howard Archer said: "Higher inflation is clearly contributing to reluctance within the Bank of England to do more quantitative easing in the near term at least."

Currency markets also bet against further money printing, pushing sterling to a two-month high of $1.625 following the figures.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there