New low for food inflation

05 November, 2014
Shopping

Food inflation at lowest since December 2006

Food inflation has reached a record low, falling to 0.1% - the lowest rate since December 2006. 

This record rate was driven by the fact that the fresh food category witnessed deflation for only the second time in nearly eight years.

The study carried out by the British Retail Consortium (BRC) also said that world wheat production was forecast to reach a new record high this year, and that there was growing demand for chocolate, as prices for cocoa are at a three-year high due to high demand from Asia and other emerging markets.

There are fears that the outbreak of Ebola in West Africa could also impact on cocoa supplies globally.

Helen Dickinson, BRC director general, said: “For the 18th month in a row, shop prices have reported deflation, matching its lowest rate on record of 1.9% experienced in July 2014.

“Food inflation edged down to its lowest level on record of 0.1%. For the first time since February 2010, fresh food experienced deflation, with milk, cheese, eggs, vegetables and convenience food all cheaper than they were a year ago. This should mean great deals for shoppers as they start stocking up on seasonal fare.

“With a backdrop of falling commodity prices, cheaper imports and benign inflationary pressure in the supply chain, we expect the great deals to continue in the medium term, bar any supply chain shocks.

‘’With the current competitive environment, retailers are passing most of these savings on to consumers. As Christmas swiftly approaches, there is plenty of evidence to suggest that budgets will go a little bit further this year.’’





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