Inflation on the price of baked goods is running well below the food industry average, as retai-lers look to hold prices on staple products such as bread.
According to a report from research company Verdict, food inflation for the first four months of 2009 averaged 12%, but the rate for baked goods was just 5.6%.
"Bakery is still inflationary, but it is now one of the weaker areas of price inflation," said Neil Saunders, consulting director at Verdict. "As bread is a staple and known-value item, most retailers are very conscious of keeping the price competitive."
The Verdict research found that the price of a value 800g loaf of sliced white bread had increased by 4.2% in the past year to 39p. Standard and premium loaves had increased by 7.3% and 6.7% respectively to 94p and £1.19.
There are signs that inflation levels across the food sector are starting to come down, with a sharp fall in April, said Verdict. The annual food inflation rate fell from 12.5% in March to 7.6% in April.
The British Retail Consortium (BRC) said that food inflation fell from 9% to 7.9% between March and April. "We expect food inflation will continue to slow, as sterling appears to have stabilised, grocers renegotiate contracts and continued weakness in the economy spurs on competition in the grocery market," said Stephen Robertson, director general of the BRC.