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Inflation down but food prices set to rise

The Office for National Statistics will this week release figures which are expected to show that UK inflation has fallen from 3.1% in July to 3% in August. While this is not necessarily a massive movement in inflation, it is the very fact that the rate is beginning to slow which has given the UK government, consumers and businesses hope last week. However, there may well be a sting in the tail!

Some experts believe that pressure on worldwide commodity prices could push UK food inflation to anywhere up to 7% by the end of 2010 which would likely lead to a significant rise in underlying inflation, of which food inflation is just a part. That aside, the very fact that those in the UK will ultimately face higher food bills will place more pressure on household budgets and potentially lead to more financial problems for the UK population. This comes even before we see the full impact of the expected UK economic downturn.

Food inflation has been bubbling under the surface for some time now due to an array of different factors including commodity prices and fuel prices to name but two. When will the UK economy and inflation return back to "normal"?

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