Food prices and energy bills are rising faster in Britain than almost anywhere else in the Western world. Out of a group of 30 industrialized countries - that form the OECD - only Hungary, Mexico and Turkey are experiencing higher levels of inflation.
Shoppers are paying 4.9% more for their weekly groceries compared with a year ago. This is nearly double the increase of European Union and more than five times higher than France, said the Organization for Economic Co-operation and Development (OECD) British homeowners are also paying 4.4% more for their electricity and gas, despite boasts from leading power companies they are cutting their customers' bills. However, the average consumer in the rest of the EU is only suffering a 1.5% rise in energy bills. And in parts of Scandinavia and Iceland these bills have actually dropped. Norwegian families now pay 13.7% less than they did 12 months ago. The figures came as another report suggested that four interest rate rises in the past 12 months are starting to hit consumers' pockets.
The Nationwide Building said that consumer confidence fell for the first time in six months during June and that consumers were more gloomy about the economic outlook than they were a year ago. A series of interest rate rises, coupled with higher taxes, have forced up people's household bills and dented their disposable income. Fionnuala Earley, Nationwide's chief economist, said: “The fall in confidence in June reflects some weakening sentiment about the economy and jobs both now and in the future”. “Higher interest rates are likely to be a major factor behind this as consumers recognize their impact on the wider economy as well as on their own pockets.” Homeowners are likely to be hit further in the next week if Mervyn King, the governor of the Bank of England, can persuade the monetary policy committee to vote to raise interest rates by a quarter percent to 5.75%. It would be the fifth rise since August last year and will affect the 2.4 million who pay standard variable rate mortgages rather than fixed rates.
The OECD monthly inflation report shows that food and energy costs cooled in May. In April, food prices were up by 6% and energy costs were up by 7.9%. However, increases in the cost of living in Britain remain stubbornly higher than nearly all our international peers. Out of a group of 30 industrialized countries that form the OECD, only Hungary, Mexico and Turkey are experiencing higher levels of inflation. British retailers claim that shoppers are not being ripped off by the higher prices and that any recent rises are because of poor harvest that have pushed up the prices farmers charge for everything from beef to tomatoes. Utility companies also claim their bills merely reflect rises in the wholesale markets, with the price of gas and oil starting to creep back. Of the industrialized countries only the US experienced the same inflation pattern. The price of food rose by 4.4% and while the cost of energy increased by 4.9% compared to a year ago. The average cost of energy within the G-7 countries rose by 3.1% compared to a 0.3% rise across the wider European region. (dailymail.co.uk)