Commodity costs push up food inflation figure

18 July, 2011
Page 10 

Surges in the price of key bakery commodities, such as wheat and sugar, helped push annual food inflation to nearly 6% last month more than double the average shop price inflation.

According to the British Retail Consortium (BRC), overall shop price inflation stood at just 2.3% last month, while food inflation hit 5.7%, due to huge increases in commodities. Cattle, lean pork, wheat and sugar prices have all increased by 21-25% year on year, while Robusta coffee is up 42%.

High inflation is leading to unprecedented levels of promotions and discounts to drive sales and increase market share, said the BRC, with AC Nielsen data showing promotions now represent 39% of all food sales, compared with 34% last year.

Data from Assosia showed that supermarkets ran 791 promotions on wrapped bread in the year to the end of May 2011, compared to 563 promotions the year before a rise of 40%.

BRC director general Stephen Robertson said: "Overall shop price inflation is being driven by surging world commodity prices, the effect of the weak pound on import costs and higher VAT."

The BRC said it expected tight supplies and rising costs to continue exerting pressure on food prices over the coming months.





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