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Inflation has eased for the third month in a row but food price rises showed no sign of slowing down.

Official figures from the Office for National Statistics this morning showed the UK headline rate of inflation fell to 10.1% in the 12 months to January, coming down from 10.5% in December.

The drop was mostly attributed to falling petrol prices, the cost of air travel slowing after a steep rise, and cheaper prices in restaurants, cafés and takeaways.

However, this was offset by rising alcohol and tobacco prices following seasonal cuts in December, the ONS said.

The main drivers of inflation continued to be energy bills and rising food prices.

Food inflation remained at 16.7% in January as supplier price hikes continued to hit supermarket shelves.

British Retail Consortium CEO Helen Dickinson said: “While inflation eased for the third month in a row, households are still being squeezed by high prices.

“The cost of food remains elevated, with the ripple effect from the war in Ukraine pushing up the price of food due to the knock-on increases from high fertiliser and energy prices. So as Christmas discounts faded away, households will have felt the pressure in their weekly grocery shop.”

Fuel prices rose by 7.7% in the year to January 2023, down from 11.5% in the year to December 2022.

Average petrol and diesel prices stood at 149.4p per litre and 172.1p per litre respectively in January, and were last lower in February 2022 when petrol stood at 147.6p per litre, and in March 2022 when diesel stood at 170.5p per litre.

ONS chief economist Grant Fitzner said: “There are further indications that costs facing businesses are rising more slowly, driven by falls in crude oil, electricity and petroleum prices. However, business prices remain high overall, particularly for steel and food products.”

Morning update

Heineken has posted higher-than-expected profits in 2022 as price rises, demand for its premium brands and a recovery for volumes fuelled a 30% jump in revenues.

All regions around the world contributed with double-digit organic growth, with a sharp recovery in Asia Pacific in the second half of the year and the reopening of the on-trade in Europe in the first half helping volumes rise by 6.9% year on year and back above pre-pandemic levels.

Premium beer volumes grew 11.4% year on year and came in 15.6% ahead of 2019 on an organic basis, with the range outperforming the total portfolio in most of the Dutch brewer’s markets.

Revenues for the year increased 30.4% to €34.7bn, with 21.2% of organic growth thanks to the rise in volumes, the continuing trend for premiumisation and a 14.3% hike in prices to combat inflation.

Operating profits jumped 24% to €4.3bn as a result, while net profits increased 30.7% to €2.8bn.

Heineken said its productivity programme – targeting €2bn of savings by 2023 – contributed to the bumper rise in profits, with €1.7bn of savings captured by the end of 2022.

“I am pleased that we delivered a strong set of results in 2022 in a continuously challenging and volatile environment, growing ahead of the beer category in the majority of our markets,” said CEO Dolf van den Brink.

“We delivered balanced growth as we priced responsibly, made a further step in our productivity programme and continued to invest in our brands and capabilities. Compared to 2019, volume has now fully recovered, net revenue is ahead by close to 18% and operating profit by over 11%, organically.

“For the coming year, the global economic outlook will remain challenging. We will continue to invest, whilst staying disciplined on pricing and costs.”

In 2023, Heineken is targeting organic operating profit growth in the mid to high single digits and expects to exceed its €2bn savings goal.

The FTSE 100 opened down 0.1% to 7,949.52pts.

Heineken shares reacted well to its results, climbing 1.5% to €92.60.

Other risers this morning included Carrefour, up 7.7% to €17.68 following a strong set of results filed after hours yesterday predicting more profit growth this year, and Ahold Delhaize, up 6.4% to €29.24 thanks to double-digit sales and profits growth at the Dutch retailer.

In the UK, McBride is up 4.4% to 24.9p, Bakkavor is up 2.2% to 111p and Coca-Cola HBC is up another 2% to 2,078p.

Fallers included Science in Sport, down 3.3% to 13.1p, Kerry Group, down 1.1% to €85.54, and PZ Cussons, down 0.7% to 192p.

Yesterday in the City

The FTSE 100 closed at a new record high after climbing 0.2% to 7,964.16pts despite the latest government figures revealing UK wages suffered a real-terms decline thanks to inflation.

Shares in Hellenic Coke bottler Coca-Cola HBC fizzed 5.1% higher to 2,041p following a strong set of 2022 results, with profits and revenues up by double-digits.

The Coca-Cola Company, which sells the concentrates to partner bottlers, saw shares fall 1.4% in the early going in New York despite posting its own set of strong full-year results. It closed down 1.7% to $59.59.

Elsewhere, risers included McBride, up 4.8% to 24.9p, B&M European Value Retail, up 1.3% to 481.9p, and Carrefour, which increased 1.9% to €16.41 ahead of its final results.

Fallers included HelloFresh, Greencore and Bakkavor, down 3.5% to €21.74, 3.1% to 79.4p and 3.9% to 108.6p respectively.