Food prices in October see highest inflation rate in a year

Food inflation accelerated to 0.5 per cent in October, up from 0.1 per cent in September, according to the Shop Price Index by BRC-NielsenIQ.

This is the highest inflation rate since November 2020, and above the 12- and 6-month average price growth rates of 0.1 per cent and -0.1 per cent, respectively.

Following ten months of deflation, fresh food prices rose by 0.3 per cent in October compared to a fall of -0.4 per cent in September. Ambient food inflation was steady at 0.8 per cent.

Non-food deflation was also steady at 1.0 per cent in October. Overall, shop Price annual deflation eased to 0.4 per cent in October compared to September’s decrease of 0.5 per cent.

“While overall prices remain below their October 2020 levels, this is the third consecutive month of both food and non-food month-on-month rises,” Helen Dickinson, chief executive of the BRC, noted.

“Tight margins mean retailers may not be able to absorb all of these new costs, so prices will continue to rise. A BRC survey showed three in five retailers expect prices to increase in the run up to Christmas, and the ongoing labour shortages are making the situation worse.”

Mike Watkins, head of retailer and business insight at NielsenIQ, added: :With food prices slowly increasing we can expect shoppers to start to rebalance basket spend over the next few weeks, particularly with increased concerns about discretionary spend.

“And with consumer sentiment now more cautious we cannot ignore that availability issues are still top of mind. So consumers will be uncertain about when and where to spend and with Christmas promotions about to kick in, competition will intensify in both food and non-food retailing.”