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Inflation has eased to its lowest levels in the UK for more than two years as the rising cost of food slowed significantly in February, according to new official data released this morning.

The Office for National Statistics revealed the headline measure fell from 4% to 3.4% in the year to February.

A slowdown in food price rises was cited as the main factor in February’s fall, with annual food and non-alcoholic beverage inflation at 5% last month, compared with 7% in January.

It’s the lowest recorded figure in food since Janaury 2022, with the rate easing for an 11th consecutive month and coming down from a recent high of 19.2% in March, which was the highest annual rate seen for more than 45 years.

Prices were almost flat between January and February, compared with a monthly rise of 2.1% a year ago.

The ONS said the annual rates for most types of food product slowed between January and February 2024, with the largest effect coming from bread and cereals. Other smaller downward effects came meat, vegetables, milk, cheese and eggs.

Inflation at restaurants and hotels also helped pushed down the UK headline rate.

Prices of alcohol and tobacco remained higher, with inflation coming down from 12.2% to 11.8%.

ONS chief economist Grant Fitzner said the falls were only partially offset by price rises at the pump and a further increase in rental costs.

FDF CEO Karen Betts said it was “good” to see food and drink inflation continue to fall.

“This reflects prices stabilising across food and drink supply chains, including energy, alongside manufacturers’ continued and sustained efforts to keep prices down for shoppers,” she added.

“Food and drink price inflation should continue to ease in the coming weeks. But some underlying factors are acting against this, from rising labour costs to erratic weather patterns, like this winter’s heavy rainfall across the UK which is impacting agricultural crop yields.”

Betts said investment in the fmcg industry was “worryingly low” if the UK was to be confident in its food security.

“And the government is making UK food and drink less attractive to invest in with its insistence on UK-wide ‘not for EU’ labelling. This is an expensive and unnecessary policy that will particularly hit small businesses and exports, and we’re urging the government to reconsider.

“There are good, digital alternatives if the government wants to monitor food movements in the UK, which in time could also be adapted to ease checks with the EU.”

Morning update

Britvic has appointed Romeo Lacerda to the board as a non-executive director and member of the audit committee and nomination committee.

Lacerda brings 35 years of commercial experience in the fmcg sector, having started his career at Unilever, before moving to Kraft Foods in 1995, which later became Mondelez.

Chairman Ian Durant said: “Romeo’s exceptional knowledge and experience of the commercial fmcg landscape, coupled with his deep understanding of our growth market in Brazil, will make him an invaluable asset to the Britvic board.”

Lacerda joins the board from 27 March.

The FTSE 100 dropped 0.2% to 7,725.38pts as markets opened.

Naked Wines clawed back some its losses in the early going to rise 4% to 52.9p.

Cranswick and Greencore were also among the risers, up 1.1% to 4,104p and 0.9% to 113p respectively.

Ocado is down 1.2% to 455.8p so far, with British American Tobacco 1% lower at 2,388p.

Yesterday in the City

The FTSE 100 ended the day 0.2% higher at 7,738.30pts.

Unilever investors reacted positively to Hein Schumacher’s plan to spin-off the ice cream business and make further cost savings, sending shares rising 3.1% to 3,929p.

Eagle Eye shares also finished 0.1% up at 570.8p as revenues and profits made double-digit gains in the first half, while palm oil producer MP Evans climbed 2.4% to 768p following its full-year results.

Other climbers included Just Eat Takeaway, up 2.8% to 1,156p.

Diageo, on the other hand, sank 1.4% to 2,827.5p after announcing respected chairman Javier Ferrán is retiring next year to be replaced by former civil service boss John Manzoni.

Naked Wines led the fallers again, plummeting a further 11% to 50.9p on the back of news it has hired Interpath to assess refinancing options. The stock is down 23% in the past five days.

Reckitt Benckiser also dropped another 4.5% to 4,368p, while Virgin Wines UK fell 3% to 37.8p.