British grocery price inflation spikes to 3.5% as Ukraine crisis bites        

Ireland imports many of its grocery items from across the Irish Sea and survey is a sign of more expensive goods here in the coming weeks

A British survey says prices have risen fastest for savoury snacks, fresh beef and cat food, but are falling in bacon, beer and lager, and spirits.

British grocery price inflation has risen 3.5% in recent weeks, the fastest pace for almost nine years, while overall consumer inflation in Germany accelerated to 5.5% in February, as the hike in energy costs amid the Russian invasion continued to bite. 

Both readings point to worse news in the coming weeks for Irish households. 

In Britain, grocery inflation is running at an annual rate of 3.5% during the 12-weeks to late February 20, according to market researcher Kantar, whose survey is based in 75,000 grocery items. 

Kantar which publishes its latest Irish supermarket survey next week, last month said that Irish grocery inflation was then running at 1.7%. 

Ireland imports many of its grocery items from across the Irish Sea and the British survey is a sign that the spike in energy costs is likely spilling across the economy. 

Many of the supermarket items are particularly exposed because they involve a lot of energy in their manufacture and distribution. 

In Britain, Kantar said prices rose fastest in the period for savoury snacks, fresh beef and cat food, but falling in bacon, beer and lager, and spirits.

“Apart from the start of the pandemic, when we saw grocers cut promotional deals to maintain availability, this is the fastest rate of inflation we’ve recorded since September 2013," said Fraser McKevitt, who is head of retail and consumer insight at Kantar. 

Added to this, ongoing supply chain pressures and the potential impact of the conflict in Ukraine are set to continue pushing up prices paid by consumers.

Meanwhile, German inflation resumed its ascent, bolstered by a surge in energy costs that’s in danger of intensifying due to Russia’s invasion of Ukraine.

After snapping six straight months of acceleration in January, consumer prices jumped 5.5% from a year earlier in February -- more than the 5.4% median estimate of economists surveyed. A national measure reached 5.1% -- the highest since 1992. 

A spike in energy costs is largely to blame for the elevated inflation that’s swept the whole of Europe in recent months. ECB officials warn the situation will likely persist for longer, while President Christine Lagarde has vowed to do whatever is needed to ensure price stability. France, Italy, and Spain also reported faster-than-expected inflation last month. 

Eurozone data

Eurozone data are due on Wednesday, with economists forecasting a record reading of 5.6%. Irish inflation in January had fallen to 5%, but most economists believe that price pressures will persist this year.            

The ECB’s Governing Council will discuss monetary policy next week. While the meeting was originally envisaged to further chart the exit from pandemic stimulus, the focus has more recently shifted to how the war in Ukraine will affect the economy -- particularly if natural gas deliveries are disrupted. 

• Additional reporting Bloomberg