Food prices returned to growth (0.1%) in December following deflation the previous month, according to the latest BRC-Nielsen Shop Price Index (SPI).
After the SPI reported deflation in November for the first time since the series began in December 2006, fresh food prices are now up. Inflation was experienced in the oils and fats, meat, fruit and fish categories. However, downward pressure came from the milk, cheese and eggs, vegetables and convenience food categories, all of which experienced annual deflation in December.
Ambient food dropped by 0.1% in December from a 0.2% fall in November. Deflation was experienced in all sub-categories excluding beverages.
Mike Watkins, head of retailer and business insight at Nielsen, said the consumer had been the winner all round with high levels of discounting across most retail channels in 2014.
He added: ‘’With little external pressure to move prices upwards and an uncertain level of consumer demand, retailers will be cautious about price increases so we can expect a continuation of deflation for at least the first part of 2015.”
BRC director General Helen Dickinson said: “This significant run of deflation isn’t all bad news for retailers. The Producers Price Index (which tracks the cost of raw materials to producers) is deflationary so retail businesses have seen significant decreases in their own input costs.”