Inflation eases but food prices are still high
INFLATION has shown an encouraging drop in the last few months – with food prices steadily falling with it.
Food inflation slowed to 13.4% in July, down from 14.6% in June, putting it at its lowest level this year, according to the British Retail Consortium (BRC) and NIQ.
Their shop price index data also showed fresh food inflation decelerated to 14.3%, down from 15.7% in June, while ambient food inflation dropped to 12.3% in July, down from 13% in June.
BRC chief exec Helen Dickinson said: “Food price inflation slowed to its lowest level this year, with falling prices across key staples such as oils, fats, fish, and breakfast cereals.
“These figures give cause for optimism, but further supply chain issues may add to input costs for retailers in the months ahead.
“Russia’s withdrawal from the Black Sea Grain Initiative and subsequent targeting of Ukrainian grain facilities, as well as rice export restrictions from India are dark clouds on the horizon.
“We expect some global commodity prices to rise again as a result, and food prices will be slower to fall.”
Meanwhile, the Office for National Statistics (ONS) has reported that overall CPIH sat at 7.3% during June, a slight drop from the previous month of 0.6 percentage points.
Food inflation still remains stubbornly high, however it showed signs of promise. According to the ONS, food inflation sat at 17.4% during June, down from May’s 18.4%.
David Thomson, chief executive officer at Food and Drink Federation Scotland, said: “It’s encouraging to see food and drink inflation falling to 17.4% from its peak of 19.2% in March.
“We hope the rate of food and drink price inflation will continue to fall steadily over the coming months, offering households some relief from the rapidly rising prices of recent months.
““However, food and drink manufacturers’ costs remain 33% higher than they were three years ago. Our sector is still dealing with many higher-than-normal ingredient costs and volatile and higher-than-normal energy prices, alongside persistent labour shortages.
“Global weather events – such as the heatwave currently affecting much of Europe – are also increasingly affecting agricultural output and seasonal supplies and will have an impact on prices.
“Russia’s decision to pull out of the Black Sea grain deal is unhelpful, too, and brings new risks to global grain supplies.”
Kantar research has shown a similar downwards trend in the price of food as the firm reported that grocery price inflation sat at 14.9% for the four weeks to 9 July, marking the fourth consecutive month that the number has fallen now.
Fraser McKevitt, head of retail and consumer insight at Kantar, also highlighted how shopper habits have helped them to save more cash, explaining that switching to promotions has helped save consumers over £300 off their annual grocery bills.
He said: “It’s clear that shoppers have dramatically changed their behaviour to combat inflation, whether by trading down to cheaper products or visiting different grocers.
“The average annual increase to household spending over the past 12 months has actually been £330 – well below the hypothetical £683.”
