Surprise jump in UK grocery inflation makes interest rate cut less probable
Shoppers faced a surprise jump in grocery inflation last month, as experts warned there was worse to come if there was prolonged war in the Middle East and the odds of a UK interest cut fell sharply.In a blow to households struggling with the cost of living, grocery price inflation rose to 4.3% in the four weeks to 22 February, after falling to 4% in January from 4.7% in December, according to the market research company Worldpanel by Numerator.The European Central Bank’s chief economist, Philip Lane, also warned that prolonged war in the Middle East could lead to lower oil and gas supplies from the region, causing a “substantial spike” in inflation and a “sharp drop in output” in the eurozone.
The prospect of a UK interest rate cut later this month receded on Tuesday morning, as UK government borrowing costs rose amid fears in the City over a potential spike in inflation.The interest rate, or yield, on two-year bonds has risen by 13.5 basis points (bps), while the 10-year yield jumped by 11bps and 30-year yields were up 9bps.Financial markets indicated a 29% chance of a cut this month, down from 80% last week.The crisis has already driven oil and gas sharply higher, threatening to push up prices at the pump for UK drivers and increase household gas and electricity bills.
In an interview with the Financial Times, the ECB’s Lane said “directionally, a jump in energy prices puts upward pressure on inflation, especially in the near term”, and that such a development would be “negative” for growth.This would also apply to the UK.Inflation in the eurozone rose to an annual rate of 1.9% in February, according to a preliminary estimate from the EU’s statistics agency released on Tuesday.This was higher than economists had expected, and up from 1.
7% in January,Fraser McKevitt, the head of retail and consumer insight at Worldpanel, said: “Looking ahead to Easter, shoppers will notice that chocolate prices remain high, up 9,3% year on year,“While this is still a significant rise, the pace of inflation in the category is beginning to ease and is now at its lowest level since September 2025,”However, Greggs said “easing inflationary pressures” should boost stronger consumer spending, as it revealed a near-18% drop in pre-tax profits to £167.
4m in the year to 27 December.The Worldpanel report showed shoppers splashed out on recent celebrations.Pre-made pancake mixes were up 114% from the previous week in the seven days leading up to Shrove Tuesday, while those making their own batter paid 42p or almost 6% more than last year as the cost of key ingredients reached £7.77.Nonetheless, sales of ingredients surged, with flour up 34%, sugar rising by 17% and lemons up 70%.
Many shoppers left Valentine’s Day spending until the last minute, with almost 12% of households picking up a premium meal deal on Friday night alone, according to Worldpanel.Steak buyers sprang into action later in the week, with sales peaking on Friday and Valentine’s Day itself.Chocolate lovers also left it late, with Friday the single biggest day for purchases of Valentine’s Day chocolate.People splashed out on premium dine-in experiences.In total, they spent £39m on high-end meal deals priced at £10 or more in the week leading up to Valentine’s Day, seven times higher than the previous week.
More people have been doing their grocery shopping online, with sales made through the internet up 9.7% year on year.More than 18m orders were placed over the four weeks, which meant online shopping made up 13% of total grocery sales, the highest level since July 2021.The online retailer Ocado was once again the fastest-growing grocer over the 12 weeks to 22 February, clinging to that spot since September, with 15.1% sales growth and a 2.
1% share of the market.The discounter Lidl recorded double-digit sales growth for the 12th consecutive month, up 10% and 7.8% market share.Tesco, the biggest supermarket chain, increased sales by 4.5% to raise its market share to 28.
5%, while Sainsbury’s upped its market share to 16.1% as sales rose by 5.2%.Waitrose, part of the John Lewis Partnership, achieved its highest rate of sales growth since March 2021, at 5.6%, to reach market share of 4.
8%, a three-year high.Asda once again recorded a dip in sales year on year, this time by 2.6%, while Co-op’s sales were down 1.6%.
Iran conflict could have ‘very significant’ impact on UK economy, OBR warns; FTSE 100’s biggest fall in 11 months – as it happened
Time to wrap up….Rachel Reeves insisted Labour has “the right economic plan” for a world that has become “yet more uncertain” as she delivered a spring forecast that downgraded growth for this year.The chancellor was addressing MPs against the backdrop of surging energy prices, as investors fret about the impact of the war in the Middle East.Reeves said she was in close touch with the Bank of England governor, Andrew Bailey, as they monitored the situation and would meet representatives of the North Sea energy industry on Wednesday.New forecasts from the independent Office for Budget Responsibility (OBR), published alongside her statement, showed that as Reeves said, “inflation is down, borrowing is down, living standards are up and the economy is growing”
China calls for vessels in strait of Hormuz to be protected amid soaring shipping costs
The Chinese government has called for vessels passing through the strait of Hormuz to be protected by all sides in the escalating Iran conflict, as shipping freight rates soared.Maritime traffic through the strait – a narrow channel on Iran’s southern border that connects the Persian Gulf with the Gulf of Oman – has effectively been closed since the US and Israel launched missile attacks on Iran at the weekend, prompting a retaliation from Tehran.Beijing’s foreign ministry on Tuesday urged “all parties to immediately cease military operations, avoid escalating tensions and safeguard the safety of navigation in the strait of Hormuz”.China is the world’s largest importer of oil and fossil gas and has in recent times been the major buyer of Iranian oil, making it one of the countries most exposed to the interruption to energy shipments.The strait of Hormuz, located on Iran’s southern border, is one of the most important global trade arteries and remained devoid of ships for a fourth day on Tuesday
Iran war heralds era of AI-powered bombing quicker than ‘speed of thought’
The use of AI tools to enable attacks on Iran heralds a new era of bombing quicker than “the speed of thought”, experts have said, amid fears human decision-makers could be sidelined.Anthropic’s AI model, Claude, was reportedly used by the US military in the barrage of strikes as the technology “shortens the kill chain” – meaning the process of target identification through to legal approval and strike launch.The US and Israel, which previously used AI to identify targets in Gaza, launched almost 900 strikes on Iranian targets in the first 12 hours alone, during which Israeli missiles killed Iran’s supreme leader, Ayatollah Ali Khamenei.Academics studying the field say AI is collapsing the planning time required for complex strikes – a phenomenon known as “decision compression”, which some fear could result in human military and legal experts merely rubber-stamping automated strike plans.In 2024 the San Francisco-based Anthropic deployed its model across the US Department of War and other national security agencies to speed up war planning
Anthropic’s AI model Claude gets popularity boost after US military feud
The AI model Claude has surged in popularity after being blacklisted by the Pentagon last week over ethics concerns.Claude climbed to the No 1 spot on Apple’s chart of top free apps on Saturday in the US – dethroning OpenAI’s ChatGPT, just one day after the Pentagon tapped OpenAI to supply AI to classified military networks. The bot’s app climbed the iPhone app charts in the UK but did not beat out ChatGPT. Claude also raced up the Android charts in the US and UK, though ChatGPT reigned supreme, according to data from Sensor Tower.Claude and other apps by the startup Anthropic suffered outages early Monday amid what the company described as “unprecedented demand for Claude” over the last week
Racing’s crisis intensifies with tracks on verge of civil war after Allen quits BHA
A grouping that includes most of Britain’s major racecourses on Tuesday fired the opening shot in what could prove to be a civil war involving the country’s tracks, following confirmation by the British Horseracing Authority earlier in the day that Charles Allen had resigned from his position as chair of the sport’s ruling body after just six months in the role.Jockey Club Racecourses, which controls a significant number of high‑profile tracks including Cheltenham, Aintree, Epsom and Newmarket, issued a joint statement with four of the biggest “independent” courses: Ascot, Newbury, York and Goodwood shortly after Lord Allen had issued a statement of his own, confirming his departure.The racecourses’ statement made it plain that the major tracks were supportive of Allen’s plans for a fully independent BHA board, the first step in what he saw as a plan to turn the sport into “a modern, commercial and cultural powerhouse”. This, in effect, directed the blame for his departure directly at the sport’s smaller tracks, and in particular those owned by Arena Racing Company, which run mainly lower-grade meetings to serve the off-course betting market.“Ascot, Goodwood, the Jockey Club, Newbury and York racecourses have today written to the chairman of the Racecourse Association,” the statement said, “calling for a formal governance review of the RCA [and] requesting a proposal for reform by the end of April 2026
Jon Rahm accuses DP World Tour of ‘extorting players’ by issuing LIV fines
Jon Rahm’s dispute with the DP World Tour has escalated after the Spaniard accused the organisation of “extorting” golfers over fines for competing on the LIV circuit. Rahm’s Ryder Cup future remains in peril with no resolution to the matter in sight, with insiders at the DP World Tour and Europe’s Ryder Cup fans baffled by his stance.Rahm incurred fines and suspensions as a DP World (formerly European) Tour member playing on what are regarded as competing Saudi‑backed LIV events. Rahm signed for LIV in 2023 in a deal reportedly worth hundreds of millions of dollars.Rahm has appealed against those sanctions, with a hearing to come
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