06 June 2008, 14:33 PM
  • Even though food prices have climbed more than six percent since May 2007, retailers are still absorbing most of the cost increases, the British Retail Consortium claims.

The BRC-Nielsen Shop Price Index (SPI) reported an annual shop price inflation of 1.8% in May. According to the index, overall inflation can be attributed entirely to food, with both ambient and fresh categories increasing by 5.4% and 6.4% respectively, while non-food remains deflationary.

The BRC director general, Stephen Robertson, says, “Intense pressure from rising costs has pushed up the shop price of food, but it is clear retailers are continuing to shield customers from the full impact. 

“EU figures show UK customers spend the smallest proportion of their income on food of any EU country because British retailers continue to offer the most competitive prices they can. Non-food prices fell again in May. They have now been down year-on-year every month since December 2006.”

However, despite a competitive UK market, food prices will keep rising. Mike Watkins, senior manager at Nielsen, explains, “Food inflation looks set to continue over the next few months across most categories as cost price increases feed through to shop prices, despite the focus by retailers on money-saving promotions in recent weeks.”