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Food prices have continued to soar to fresh highs despite the overall headline rate of UK inflation slowing down in the past month.
Annual food inflation hit 16.5% in the year to November, up slightly from 16.4% a month earlier, according to the latest figures from the Office for National Statistics (ONS).
The category has now registered a rise for 16 months in a row, up from -0.6% in July 2021, and food prices are now at the highest level since September 1977.
The ONS noted the biggest driver this month was the price of bread, with a small offset from fruit, where prices fell.
Alcohol and tobacco slowed down in November, falling from 6.2% to 4.2% as a result of price movements for tobacco.
The headline rate of UK inflation fell back to 10.7%, compared with 11.1% in October, thanks to a drop in petrol prices from record highs. However, that fall was slightly offset by rising prices for alcohol in restaurants, cafes and pubs, the ONS said.
Overall, fuel prices rose by 17.2% in the year to November 2022, down from 22.2% in October. Average petrol and diesel prices stood at 163.6 and 187.9 pence per litre in November 2022, compared with 145.8 and 149.6 pence per litre a year earlier.
ONS chief economist Grant Fitzner said: “Although still at historically high levels, annual inflation eased slightly in November.
“Prices are still rising, but by less than this time last year, with the most notable example of this being motor fuels.
“Tobacco and clothing prices also rose, but again by less than we saw this time last year. This was partially offset by prices in restaurants, cafes and pubs, which went up this year compared to falling a year ago.”
Helen Dickinson, chief executive of the British Retail Consortium, added: “It will undoubtedly be a challenging Christmas period for many households across the UK.
“Not only are the costs of food and gifts up on last year, but bills are up 27% too. Unfortunately, the war in Ukraine continues to put pressure on energy and food prices, meaning there is little sign that inflation will ease significantly soon.
“To combat inflation, retailers are investing hundreds of millions into lower prices for the future, as well as finding ways to keep the cost of Christmas down for their customers. This includes freezing the price of many essentials, offering discounts to vulnerable groups, raising pay for their own staff, and expanding their value ranges.”
Morning update
British Honey Co secures short-term funding
Honey and spirits producer British Honey Co has ended a search for a buyer after agreeing a £750k loan from one of its shareholders.
The group announced a strategic options review in October, which included the possibility of a sale.
This morning it said the formal sale process generated interest from a number of parties but it decided to take an offer of additional funding from a major shareholder instead.
British Honey added a sale was unlikely to result in an offer at a valuation the board considered attractive to existing shareholders.
It has now terminated the process and accepted a £750k loan from Khaled Said, who own a 14.3% holding in the company.
The loan has been provided over a two-year term at an annual interest rate of 10%.
The board said, with the funding in place, it would now appoint a full-time finance director and would also look to “strengthen the board’s overall composition”.
It will allow the business to meet its short-term working capital needs and pay creditors, but British Honey warned further capital would be required to support and develop the group over the next 12 months and beyond, which the board expected to explore in the new year with the support of Said.
The company can also now publish results for the year ended 31 December 2021 and interim results for the period ended 30 June 2022.
It will also then apply for the suspension of trading in the company’s shares on the Aquis exchange to be lifted.
Chairman Richard Day said: “We have been through a rigorous review process during the formal sales process and it is clear we have a good business, with significant opportunities. We have been heartened by the interest and support shown towards the company and very much welcome the funding support provided by our major shareholder Khaled Said.
“Meanwhile, we have enjoyed continued customer demand for our products which we are keen to supply. The board sees clear potential for the next financial year and beyond to show considerable improvement on recent years.”
Love Hemp agrees £1.5m loan
Troubled CBD brand Love Hemp has secured a £1.5m to pay off a debt to its invoice finance provider.
The group also announced chairman Graham Mullis, interim CFO Anthony Dyer and non-executive director Andrew Male have all resigned, but CEO Tony Calamita will remain in his role.
Shares in Love Hemp have been suspended from the Aquis Stock Exchange since May and the business was fined by the exchange in August over a misleading fundraising announcement made earlier in the year.
This morning, Love Hemp reported “a strong sales performance” for the first quarter to the end of September, with sales up 42% year on year to £1.1m thanks to growth in the retail channel driven by a launch in Tesco.
However, the business warned its working capital has been hit by slower than normal payments from retail customers and dwindling consumer confidence.
Its invoice discount lender, Windfall Logistics, has also stopped providing cashflow in recent weeks because of unexpected invoices for past product promotions - including an overdue loan of £450k - from its largest retail customer.
The difficulties hit sales in the second quarter and are expected to result in slower growth in the typically busiest time of the year.
It led the company to explore options and resulted in an agreement with a group of strategic investors for a £1.5m secured loan.
The five-year loan will accrue at an annual rate of 20%.
Love Hemp will use the money to pay Windfall Logistics £700k and the remaining funds will be used to complete the manufacturing facility in Croydon, marketing, support research and development with the introduction of new products and for general working capital purposes.
The company also said it would not be able to complete the audit of its financial statements for the 2021/22 year in time to file by the end of the year and, therefore, would not seek to apply to lift the suspension of its shares.
Chairman Graham Mullis said: “Whilst the company has continued to make operational progress in difficult market conditions, manging working capital has been a major challenge and a significant distraction to the board and management.
“We are, therefore, pleased to complete the loan facility which has provided the company with the best and most timely option of addressing both the short and long-term finance options of the company.
“I believe with new finance, potentially stronger access to further finance, and a new board, the company has a bright future.”
Morning share movements
The FTSE 100 fell back 0.4% to 7,471.17pts on the latest UK inflation data.
Virgin Wines UK is up 3.6% to 72p this morning, while Bakkavor is up 3.1% to 99p, PayPoint is up 2.6% to 519p and Nichols is up 1.8% to 1,130p.
Deliveroo and Fever-Tree Drinks are among the early fallers, down 2.7% to 85.7p and 2.6% to 1,058p respectively.
Yesterday in the City
The FTSE 100 jumped 0.8% to 7,502.89pts yesterday as inflation in the US slowed down.
Risers included tech stocks THG, Delivery Hero, Deliveroo and HelloFresh, up 9.8% to 63p, 9.3% to €43.73, 6% to 88.1p and 4.4% to €24.43 respectively.
Tobacco stocks Imperial Brands and British American Tobacco were among the fallers, down 1.6% to 2,028p and 1.4% to 3,261.5p.
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