British food inflation hits two-year low

01 August, 2012

Figures released today by the British Retail Consortium (BRC) revealed food inflation fell to 3.1% in July.

The Shop Price Index from the BRC and global information and insights firm Nielsen, revealed the figure had dropped last month from 3.5% in June, while deflation in non-food had remained the same at 0.3%.

Overall shop price inflation saw a slight decrease to 1.0% last month, compared to 1.1% in June.

Stephen Robertson, director general of the BRC, said: “A two-year low for food inflation is good news for hard-pressed households still suffering falls in disposable incomes. Lower shop price inflation is helping to narrow the gap between living costs and wage increases.

“Extra promotions, particularly linked to party food and this summer’s big events, are combining with past falls in commodity prices, which are working their way through to shop prices.

“But the relief may not last. Poor harvests, especially of corn and wheat in the USA, are creating a build-up of inflationary pressure. Animal feed has risen sharply in recent months and is likely to affect prices for things like meat, poultry and eggs.”

Mike Watkins, senior manager of retailer services at Nielsen, said: “Over the past few months we have seen difficult trading conditions due to the unseasonable weather. In food, promotions remain close to an all-time high and the focus on price cuts and the use of vouchers or coupons continues, as consumer demand is unpredictable.

“So shoppers are seeing a double benefit as external cost price pressures have also eased a little, which contributed to a further slowing in shop price inflation in July.”





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