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UK grocery inflation has hit a new record high – with customers now paying hundreds more a year – but there are warnings the worst is yet to come.

As inflation for food hits 17.5%, Kantar Worldpanel reported households are now facing a potential £837 hike in the annual cost of their regular basket – although consumers are increasingly shopping around in a bid to find the best value.

Its latest report said footfall was up in “every single grocer” over the four weeks to March 19, with households now visiting three or more of the top 10 retailers per month on average – with chains “battling it out” to get buyers through their doors.

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But amid concerns over the impact of salad shortages in some UK supermarkets, Kantar said shoppers had instead turned to independents to plug any gaps in availability.

Its head of retail and consumer insight, Fraser McKevitt, said: “Despite concerns about shortages, the number of baskets containing tomatoes, cucumbers or peppers in the 10 major grocers stayed at 17% in March, the same as February.

“For any shoppers who couldn’t get what they wanted in larger supermarkets, the independents stepped in, with the volumes of tomatoes, peppers and cucumbers in baskets rising by 32%, 26% and 21% respectively in these stores.”

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The cost of sugar has helped drive inflation

‘The worst is yet to come’

Shop prices are now 8.9% higher than they were a year ago, up from February’s 8.4% increase, according to the British Retail Consortium (BRC)-NielsenIQ index.

The rising cost of sugar, coupled with high manufacturing costs, has contributed to price rises for chocolate, sweets and fizzy drinks. Fruit and vegetable prices have also risen as poor harvests in Europe and North Africa limited availability.

But there are warnings the UK has not seen the worst of the surging prices.

BRC chief executive Helen Dickinson said: “Shop price inflation has yet to peak.

“Food price rises will likely ease in the coming months, particularly as we enter the UK growing season, but wider inflation is expected to remain high.”

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Mike Watkins, head of retailer and business insight at NielsenIQ, said: “Inflation continues to have an impact on the spending power of shoppers and increased energy bills from April will add more pressure.”

“Since food prices have risen retailers have seen more visits but less basket spend, as shoppers manage their weekly food bills by shopping little and more often and seeking out the lowest prices.

“And as Easter approaches some high street retailers will also be offering discounts and promotions to encourage customers to spend.”

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Unexpected rise in UK inflation

The fastest-growing supermarkets

Mr McKevitt said shoppers were increasingly taking advantage of store loyalty cards, with nine in ten consumers having one in their wallet, while shoppers are also picking more own-label lines, sales of which are up by 15.8% during the period compared to last year.

But he added: “People are keeping some space in their baskets for the brands they know and love. Outside the discounters Aldi and Lidl, branded goods still make up 52% of the market and sales grew by 7.2% over the past month, the fastest rate we’ve seen since February 2021.

Kantar said Lidl was the fastest growing supermarket with sales rising by 25.8%, earning it a market share of 7.4%.

Tesco remains Britain’s largest grocer with a 26.9% share of the market, while Sainsbury’s is on 14.8% and Asda 14.3%, according to the data.

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Direct trains from UK to Germany ‘one step closer’, but nothing yet on journeys to Berlin

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Direct trains from UK to Germany 'one step closer', but nothing yet on journeys to Berlin

The UK has come a “step closer” to having direct, high-speed rail connections to Germany, the Department for Transport has said.

A partnership between international train operator Eurostar and German national rail company Deutsche Bahn (DB) has “set the foundation” for a fast rail connection between Britain and Europe’s largest economy, the businesses announced on Thursday.

It means the companies are exploring options to offer direct services between London and Cologne and Frankfurt.

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Such direct services would mean reaching Cologne in four hours, and Frankfurt in less than five from the capital city.

At present, rail passengers have to change trains in Brussels to reach those cities. It takes at least five-and-a-half hours to reach Frankfurt, and four-and-a-quarter hours to arrive in Cologne.

Cologne Central Station could soon be served by trains from the UK. Pic: AP
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Cologne Central Station could soon be served by trains from the UK. Pic: AP

The proposed services would use existing lines and infrastructure. Passengers would board a double-decker Eurostar in London, and be spared a change of trains on the continent.

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The ambition to create such links had already been announced, as had a plan to allow direct rail travel from London to Geneva, but the partnership between DB and Eurostar had not.

Will it definitely happen?

Details and technicalities are yet to be worked out, with the German train company highlighting that any services are contingent upon “the necessary technical, operational, and legal prerequisites being met”.

“Implementation by individual railway companies is considered extremely difficult,” DB said.

“Joint partnerships are therefore crucial.”

What about Berlin?

Nothing was announced for a direct service to Berlin on Thursday, despite Transport Secretary Heidi Alexander singling out the benefits and prospect of journeys from London to the German capital in July.

“The Brandenburg Gate, the Berlin Wall and Checkpoint Charlie – in just a matter of years, rail passengers in the UK could be able to visit these iconic sights direct from the comfort of a train, thanks to a direct connection linking London and Berlin,” she said at the time.

A high-speed Eurostar train heading towards France. File pic: PA
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A high-speed Eurostar train heading towards France. File pic: PA

Shorter journeys, like those to Frankfurt and Cologne, are seen as more commercially viable than the current 10-hour train journey time to Berlin.

Market studies conducted by Eurostar found travellers are comfortable with international rail journeys of up to six hours.

“Our research indicates that many would choose rail over air for trips within this timeframe,” Eurostar told Sky News. “This, combined with strong business and leisure demand on this route, is why we have prioritised London to Frankfurt.”

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The Department for Transport said the focus on the two German cities was a commercial decision by Eurostar and DB, and the UK-Germany rail taskforce, established over the summer, could pave the way for further route announcements.

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Energy grid £28bn upgrade to add £108 to household bills

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Energy grid £28bn upgrade to add £108 to household bills

The energy regulator has confirmed plans for a massive upgrade to the UK’s energy grids, adding £108 to customer bills by 2031.

Ofgem said on Thursday that the £28bn investment over the next five years would bolster resilience in the transition to a renewable energy future and that much of the bill would be offset by increased efficiency.

It pointed to estimated savings for households of around £80 because of the planned investment in gas and power infrastructure, leaving a net additional contribution of £28.

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Ofgem said the £28bn sum formed part of an estimated £90bn to be invested in the energy networks by 2031, with “adaptive” funding arrangements helping to shield customers from volatility in the market.

Most of the funding announced on Thursday will go towards maintaining gas networks, which will remain a key source of energy as green power capacity is built up further.

“Investing now to maintain world-class resilience and expand grid capacity is the most cost-effective way to harness clean power, support economic growth and protect the country from gas price shocks like the one seen in 2022”, Ofgem said.

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What’s driving energy prices higher?

Then, Russia’s invasion of Ukraine and Europe’s refusal to buy Russian gas in response, meant that energy bills hit unprecedented levels and gave birth to the wider cost-of-living crisis as higher energy costs were passed on across the economy.

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Ofgem made its announcement as costs of government energy policy and other upgrades make the biggest upwards contributions to household bills. However, the budget moved to take away some costs from April next year.

Ofgem boss Jonathan Brearley said: “The funding announced today will keep Britain’s energy network among the safest, most secure and resilient in the world. The investment will support the transition to new forms of energy and support new industrial customers to help drive economic growth and insulate us from volatile gas prices.

“But this is not investment at any price. Every pound must deliver value for consumers. Ofgem will hold network companies accountable for delivering on time and on budget, and we make no apologies for the efficiency challenge we’re setting as the industry scales up investment.

“We’ve built strong consumer protections into these contracts, meaning funds will only be released when needed and clawed back if not used. Households and businesses must get value for money, and we will ensure they do.”

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‘It’s either keep warm or eat’

A Department for Energy Security and Net Zero spokesperson said: “This government is taking action to bring down energy bills for families, with the budget taking an average £150 of costs off bills in April, and expanding our £150 Warm Home Discount to over six million families.

“Upgrading our gas and electricity networks after years of underinvestment is essential to keep the lights on and ensure energy security for our country. Without these plans, which were first set out under the previous government, costs would spiral and our security would be compromised.

“The only way to bring down bills for good and get off the fossil fuel rollercoaster is with this government’s mission to deliver clean homegrown that we control.”

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Stronger reforms called for over baby formula crisis

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Stronger reforms called for over baby formula crisis

The UK government is being urged to take even stronger action to tackle the ongoing crisis of families unable to afford baby formula milk. 

The prime minister backed limited reforms to the market to help parents save money but will not yet support more radical changes.

Sir Keir Starmer confirmed support for better public health messaging to inform parents that cheaper brands are nutritionally equivalent when compared with the most expensive.

A ban on spending store loyalty points on baby formula will also be lifted.

They were among recommendations made by the Competition and Markets Authority which investigated the baby formula industry and described the price rises in recent years as unjustifiable.

A newborn. File Pic: iStock
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A newborn. File Pic: iStock

In the House of Commons the prime minister said: “For too long parents have been pushed into spending more on infant formula.

“They were told they’re paying for better quality and left hundreds of pounds out of pocket.

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“I can announce today that we’re changing that. We will take action to give parents and carers the confidence to access infant formula at more affordable prices, with clearer guidance for retailers on helping new parents use loyalty points and vouchers together.”

It comes two-and-a-half years after a Sky News investigation revealed the extreme measures families were taking to feed their babies.

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Parents described how they had resorted to stealing to feed their infants, some were watering down formula milk or substituting it for condensed milk.

The British Pregnancy Advisory Service described the situation in 2023 as a “national scandal”.

Campaigners told Sky News the UK government needed to go further to address the crisis.

Co-founder of Feed UK Erin Williams told Sky News: “It is progress, they promised to look at this enormous nationwide problem and they have.

“At the moment women are still not routinely getting important information before giving birth – this should be given proactively to everybody and that will be a big win.

“The prime minister though needs to be tougher on the baby formula companies.

“Their marketing claims, their unjustified pricing – it’s stacked against families who just need to feed their babies safely.”

The UK government stopped short of accepting all of the recommendations made by the CMA.

More radical ideas such as a price cap on baby formula are not being considered.

Charities have also told Sky News the situations some families find themselves in have not eased.

Founder of the Hartlepool Baby Bank, Emilie De Bruijn, told Sky News the demand they see from desperate families is “constant and unmanageable”.

She said: “Parents are really feeling the pinch right now, and demands on baby banks are rising and it can feel quite relentless.

“We are pleased to see the extension of the National Breastfeeding Helpline alongside measures such as allowing parents to use points and vouchers.

“It is important that parents are supported to feed their children in whatever way they want and we hope that steps will continue to be taken to reduce the cost of formula and increase understanding that all brands are nutritionally the same.”

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