Food Price Inflation Slows

This is the third highest food inflation figure since January 2014, when it stood 1.1 per cent.

Fresh food inflation slowed down to 1 per cent in July, from the 1.4 per cent in June. Ambient food inflation experienced a 1.6 per cent increase in July, up 1.5 per cent from June.

Helen Dickinson, chief executive of BRC said, “July saw lower food price inflation than in June, bringing the march of overall shop prices towards inflationary territory to a halt, for now at least.

“Lower food price inflation in July was, in part, the result of the easing of upward pressure from the currency depreciation on fresh food. Shorter stock cycles in fresh food mean that more of the impact of the currency depreciation fed through into inflation earlier in the year and hence it is now subsiding. However, the upward pressure on food inflation has not entirely disappeared. Ambient food prices are still affected and as seasonal pricing dynamics play out, we could see fresh food inflation pick up again.

“Notwithstanding pressures on shop prices, further increases in inflation in other areas of the consumer spending basket are likely in coming months. That will put UK households’ already squeezed finances under increasing strain. The Government should be doing all it can to avoid further, potentially significant, increases in the cost of living from a failure to reach a deal with the EU that ensures no new tariffs and secures a fair Brexit for UK consumers.”

Mike Watkins, head of retailer and business insight at Nielsen said, “The amount of inflationary pressure coming from retail remains less than from other elements of the economy and in the last few weeks, whilst we have seen a return to more normal weather, the level of consumer demand remains unpredictable. Which means retailers are cautious about passing on price increases, in particular at key retail price points. So promotional activity is still an important stimulant of demand as consumers become more cautious in the face of higher living costs.”