Inflation eases but still remains above 10% as food costs at 45-year high

Published

2 years ago

April 19, 2023

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The rate of inflation has eased slightly but still remains above 10%, according to official figures showing food and drink costs at a 45-year high.

The Office for National Statistics (ONS) said the consumer prices index (CPI) measure slowed to 10.1% in March from 10.4% the previous month.

Economists had largely expected a figure of 9.8%.

The data represents a slight improvement in the energy-driven cost of living crisis as fuel prices fell back to levels seen a year ago when Russia’s war in Ukraine prompted a spike in oil costs.

However, upwards pressure remained from household gas and electricity and food, including essentials such as bread, milk and eggs.

Food and non-alcoholic drink inflation was measured at 19.1% by the ONS – the highest level since August 1977.

High commodity and production costs are mostly to blame.

Other factors behind the spike were highlighted in February’s inflation data when the salad shortage struck supermarkets.

A crumb of comfort is that prices for goods such as tomatoes and cucumbers are tipped to fall sharply as the UK growing season gathers pace.

ONS chief economist Grant Fitzner said of the easing in overall inflation in March: “The main drivers of the decline were motor fuel prices and heating oil costs, both of which fell after sharp rises at the same time last year.

“Clothing, furniture and household goods prices increased, but more slowly than a year ago.

“However, these were partially offset by the cost of food, which is still climbing steeply, with bread and cereal price inflation at a record high.

“The overall costs facing business have been largely stable since last summer, although prices remain high.”

The latest figures were released against a backdrop of hopes that a deceleration in inflation would allow the Bank of England to pause its action to battle inflation through interest rate rises.

It has raised Bank rates at 11 consecutive meetings since December 2021 in a bid to keep a lid on price pressures in the economy.

While policymakers can do nothing about things like energy – the main driver of the inflation crisis – the Bank can look to take demand out of the economy by raising borrowing costs.

It will have been encouraged by the easing in the headline rate of inflation.

But a separate measure closely watched by the Bank that strips out volatile price elements, known as core inflation, remained static at 6.2%.

Employment data released on Tuesday also showed that wages continued to creep upwards, albeit at levels well below CPI.

The Bank has previously expressed worries that wage rises seeking to combat the hit to household budgets from inflation, which have come into sharp focus during the winter strikes across the economy, risk stoking inflation ahead.

Financial market data suggested the chance of a 0.25 percentage point rise in Bank Rate at the next meeting, due next month, had risen from 80% to 95%.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, commented: “‘The heat has been turned down on the bubbling cauldron of prices, but inflation is still scalding and interest rates look set to be pushed up again to try and cool it down rapidly.

“Instead of retreating below double digits, CPI is staying stubbornly high, causing more pain for companies and consumers.”

Chancellor Jeremy Hunt said: “These figures reaffirm exactly why we must continue with our efforts to drive down inflation so we can ease pressure on families and businesses.

“We are on track to do this – with the OBR (Office for Budget Responsibility) forecasting we will halve inflation this year – and we’ll continue supporting people with cost-of-living support worth an average of £3,300 per household over this year and last, funded through windfall taxes on energy profits.”

Labour shadow chancellor, Rachel Reeves, said: “The question for families remains as real as ever – when will they feel better off under this Conservative government?

“And, why when the cost of living continues to bite, is the government refusing to freeze council tax this year, paid for by a proper windfall tax on oil and gas giants?”

Business

Gail’s backer plots rare move with bid for steak chain Flat Iron

Published

7 hours ago

May 25, 2025

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Gail's backer plots rare move with bid for steak chain Flat Iron

A backer of Gail’s bakeries is in advanced talks to acquire Flat Iron, one of Britain’s fastest-growing steak restaurant chains.

Sky News has learnt that McWin Capital Partners, which specialises in investments across the “food ecosystem”, has teamed up with TriSpan, another private equity investor, to buy a large stake in Flat Iron.

Restaurant industry sources said McWin would probably take the largest economic interest in Flat Iron if the deal completes.

They added that the two buyers were in exclusive discussions, with a deal possible in approximately a month’s time.

The valuation attached to Flat Iron was unclear on Sunday.

Flat Iron launched in 2012 in London’s Shoreditch and now has roughly 20 sites open.

The chain is solidly profitable, with its latest accounts showing underlying profits of £5.7m in the year to the end of August.

It already has private equity backing in the form of Piper, a leading investor in consumer brands, which injected £10m into the business in 2017.

Flat Iron was founded by Charlie Carroll, who retains an interest in it, but the company is now run by former Byron restaurant boss Tom Byng.

Houlihan Lokey, the investment bank, has been advising Flat Iron on the process.

McWin has reportedly been in talks to take full control of Gail’s while TriSpan’s portfolio has included restaurant operators such as the Vietnamese chain Pho and Rosa’s, a Thai food chain.

A spokesman for McWin declined to comment.

Business

AA owners line up banks to steer path towards £4.5bn exit

Published

1 day ago

May 24, 2025

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AA owners line up banks to steer path towards £4.5bn exit

The owners of the AA, Britain’s biggest breakdown recovery service, are lining up bankers to steer a path towards a sale or stock market listing next year which could value the company at well over £4bn.

Sky News has learnt that JP Morgan and Rothschild are in pole position to be appointed to conduct a review of the AA’s strategic options following a recovery in its financial and operating performance.

The AA, which has more than 16 million customers, including 3.3 million individual members, is jointly owned by three private equity firms: Towerbrook Capital Partners, Warburg Pincus and Stonepeak.

Insiders said this weekend that any form of corporate transaction involving the AA was not imminent or likely to take place for at least 12 months.

They added that there was no fixed timetable and that a deal might not take place until after 2026.

Nevertheless, the impending appointment of advisers underlines the renewed confidence its shareholders now have in its prospects, with the business having recorded four consecutive years of customer, revenue and earnings growth.

A strategic review of the AA’s options is likely to encompass an outright sale, listing on the public markets or the disposal of a further minority stake.

Stonepeak invested £450m into the company in a combination of common and preferred equity, in a transaction which completed in July last year.

That deal was undertaken at an enterprise valuation – comprising the AA’s equity and debt – of approximately £4bn, the shareholders said at the time.

Given the company’s growth and the valuation at which Stonepeak invested, any future transaction would be unlikely to take place with a price of less than £4.5bn, according to bankers.

The AA, which has a large insurance division as well as its roadside recovery operations, remains weighed down by a substantial – albeit declining – debt burden.

Its most recent set of financial results disclosed that it had £1.9bn of net debt, which it is gradually paying down as profitability improves.

AA owners over the years

The company has been through a succession of owners during the last 25 years.

In 1999, it was bought by Centrica, the owner of British Gas, for £1.1bn.

It was then sold five years later to CVC Capital Partners and Permira, two buyout firms, for £1.75bn, and sat under the corporate umbrella Acromas alongside Saga for a decade.

The AA listed on the London Stock Exchange in 2014, but its shares endured a miserable run, being taken private nearly seven years later at little more than 15% of its value on flotation.

Under the ownership of Towerbrook and Warburg Pincus, the company embarked on a long-term transformation plan, recruiting a new leadership team in the form of chairman Rick Haythornthwaite – who also chairs NatWest Group – and chief executive Jakob Pfaudler.

For many years, the AA styled itself as “Britain’s fourth emergency service”, competing with fierce rival the RAC for market share in the breakdown recovery sector.

Founded in 1905 by a quartet of driving enthusiasts, the AA passed 100,000 members in 1934, before reaching the one million mark in 1950.

Last year, it attended 3.5 million breakdowns on Britain’s roads, with 2,700 patrols wearing its uniform.

The company also operates the largest driving school business in the UK under the AA and BSM brands.

In the past, it has explored a sale of its insurance arm, which also has millions of customers, at various points but is not actively doing so now.

By recruiting a third major shareholder last, the AA mirrored a deal struck in 2021 by the RAC.

The RAC’s then owners – CVC Capital Partners and the Singaporean state fund GIC – brought the technology-focused private equity firm, Silver Lake, in as another major investor.

A spokesman for the AA declined to comment on Saturday.

Business

US-EU trade war fears reignite as Europe strikes back at Trump’s threat

Published

2 days ago

May 24, 2025

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US-EU trade war fears reignite as Europe strikes back at Trump's threat

Fears of a US-EU trade war have been reignited after Europe refused to back down in the face of fresh threats from Donald Trump.

The word tariff has dominated much of the US president’s second term, and he has repeatedly and freely threatened countries with them.

Money blog: Trump sends message to UK on energy bills

This included the so-called “liberation day” last month, where he unleashed tariffs on many of his trade partners.

On Friday, after a period of relative calm which has included striking a deal with the UK, he threatened to impose a 50% tariff on the EU after claiming trade talks with Brussels were “going nowhere”.

The US president has repeatedly taken issue with the EU, going as far as to claim it was created to rip the US off.

However, in the face of the latest hostile rhetoric from Mr Trump’s social media account, the European Commission – which oversees trade for the 27-country bloc – has refused to back down.

EU trade chief Maros Sefcovic said: “EU-US trade is unmatched and must be guided by mutual respect, not threats.

“We stand ready to defend our interests.”

Fellow EU leaders and ministers have also held the line after Mr Trump’s comments.

Polish deputy economy minister Michal Baranowski said the tariffs appeared to be a negotiating ploy, with Dutch deputy prime minister Dick Schoof said tariffs “can go up and down”.

French trade minister Laurent Saint-Martin said the latest threats did nothing to help trade talks.

He stressed “de-escalation” was one of the EU’s main aims but warned: “We are ready to respond.”

Mr Sefcovic spoke with US trade representative Jamieson Greer and commerce secretary Howard Lutnick after Mr Trump’s comments.

Mr Trump has previously backed down on a tit-for-tat trade war with China, which saw tariffs soar above 100%.

Sticking points

Talks between the US and EU have stumbled.

In the past week, Washington sent a list of demands to Brussels – including adopting US food safety standards and removing national digital services taxes, people familiar with the talks told Reuters news agency.

In response, the EU reportedly offered a mutually beneficial deal that could include the bloc potentially buying more liquefied natural gas and soybeans from the US, as well as cooperation on issues such as steel overcapacity, which both sides blame on China.

Stocks tumble as Trump grumbles

Major stock indices tumbled after Mr Trump’s comments, which came as he also threatened to slap US tech giant Apple with a 25% tariff.

The president is adamant that he wants the company’s iPhones to be built in America.

The vast majority of its phones are made in China, and the company has also shifted some production to India.

Shares of Apple ended 3% lower and the dollar sank 1% versus the Japanese yen and the euro rose 0.8% against the dollar.