Food inflation at record low

Inflation on food hit its lowest-ever recorded level in August, at 0.3%.

The British Retail Consortium (BRC) reported that food inflation remained at its lowest since the inception of the Monitor in 2006.

Fresh food inflation fell to 0.1%, the lowest level reported in the past 12 months and significantly below the 12-month average of 1.3%.

The rate of inflation within the ambient food category rose to 0.6%, from 0.2% in July.

The BRC said the prices of the majority of the agricultural commodities it follows fell over the second half of 2014, with the main exceptions being cattle, coffee and cocoa.

The consortium said the growing demand for chocolate comes as prices for cocoa are at a three-year high, due to positive demand around the world.

Sugar prices, meanwhile, have remained subdued, due to bumper crops in producing countries.

Dairy prices in the FAO’s index declined 4.4% from June, falling for a fifth month, reflecting both reduced import demand and abundant export availability.

Helen Dickinson, BRC director general, said: “The summer months saw retailers provide plenty of attractive offers on fresh food goods, which saw their lowest level of inflation this year, with vegetables, fish and also milk, cheese and eggs contributing to the downward pressure.

“What’s more, as the UK economy continues to pick up, the benefits of subdued cost increases – oil and commodity prices remained relatively flat over the first half of the year – incurred by retailers will be passed on to customers.

Meanwhile, non-food deflation decelerated to 2.9% from 3.3% in July.

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