Food inflation in the UK fell in May even as the overall rise in shop prices hits a fresh high, lifting hopes that the rapid increase in grocery prices may have reached its peak after keeping the broader consumer prices index painfully high so far this year.
After more than a year of sharp increases in the price of food, the British Retail Consortium (BRC) said today (30) that annual food inflation eased this month from 15.7 per cent to 15.4 per cent. The overall rate of inflation at grocers reached 9 per cent.
While prices for fresh food have fallen marginally, the cost of commodities such as coffee and cocoa has jumped. Fresh-food inflation, which has rocketing after spectacular increases in the price of sausages, milk, cheese and eggs, fell from 17.8 per cent to 17.2 per cent.
Price growth for ambient foods - which are goods that can be stored at room temperature - rose in the year to May from 12.9 per cent to 13.1 per cent stated BRC and NielsenIQ, adding that it is the fastest increase on ambient foods prices on record.
Despite the fall, the figure is the second highest rate of food inflation on record. While the decrease in May was modest, BRC chief executive Helen Dickinson said the latest data gives her reason to believe food inflation may finally “be peaking”.
“While overall shop price inflation rose slightly in May, households will welcome food inflation beginning to fall. The slowdown in inflation was largely driven by lower energy and commodity costs starting to filter through to lower prices of some staples including butter, milk, fruit and fish. Conversely, the price of chocolate and coffee rose off the back of the ongoing high global costs for these commodities. While non-food inflation rose, consumers are benefitting from heavy discounts in footwear as well as books and home entertainment.
“Fierce competition between supermarkets has helped keep British food among the cheapest of the large European economies. While there is reason to believe that food inflation might be peaking, it is vital that the government does not hamper this early progress by piling more costs onto retailers and forcing up the cost of goods even further. The biggest risk comes from policies such as the incoming border checks and reforms to packaging recycling fees," Dickinson said.
Mike Watkins, head of retailer and business insight at NielsenIQ, said: "Food retailing in particular is competitive, so hopefully the recent price cuts in fresh foods is a sign that inflation has now peaked, albeit ambient inflation may take a little while longer to slow."
