There are signs that food price inflation may be starting to ease, after food and manufacturing production costs fell in Britain last month for the first time in seven years.
Production costs in May registered 49.4 on the Lloyds Bank UK Sector Tracker’s league table of input costs – the first time it has gone below the 50 mark, which denotes contraction, The Times has reported.
Meanwhile, the United Nations’ food prices index, which measures changes in global food commodity prices, declined by 2.6% last month, driven by steep falls in the prices of vegetable oils, cereals and dairy products, and has fallen by 21.3% since May last year.
The Tracker measures the four potential causes of cost inflation: material prices, shipping costs, energy costs and salaries, with pay inflation the “stickiest” element, remaining close to its peak level, with struggles by firms to recruit and retain staff likely to sustain wage inflation.
Nikesh Sawjani, a senior UK economist at Lloyds Bank, said the report showed that more sectors had experienced a moderation in cost pressures in May, which would “clearly be good news for the inflation outlook”, reported the newspaper.
“These falls in costs mostly reflect reductions in shipping, raw materials and energy expenses, however, and our data suggests that cost pressures associated with wage bills remain strong as firms continued to compete for staff,” Sawjani added.
