More than six in 10 consumers (62%) say the price of their average weekly food shop has increased in the past six months, as food prices increased by 0.4% in February, according to new research.
The Retail Economics survey of 2,000 consumers suggests that food prices are rising at the fastest rate in more than two and a half years, according to chief executive Richard Lim. Two-thirds of respondents expect further price hikes over the next half year, the survey revealed.
Meanwhile, the latest BRC - Nielsen shop price index reported food price inflation of 0.4% in February, in contrast to a 0.8% fall in January. Fresh food saw a marginal inflation rate in February, up 0.1% from the 1.2% fall in each of the previous three months.
Nielsen’s head of retailer and business insight, Mike Watkins, said: “Whilst food inflation has returned, the competition between retailers means that price increases passed onto consumers in February were relatively small, and there were also some seasonal and weather related increases.”
The Retail Economics survey revealed that if food prices rose by 3% this year, 40% of respondents said they would cut back on non-essentials, while 48% agreed that they would trade down to cheaper supermarket own-brand alternatives. More than half (57%) said they would spend less on takeaway food or eating out in the event of 3% food price inflation.
If food prices were to rise over the next six months, 40% said it would be due to the impact of Brexit; 28% cited supermarkets increasing their profits; and 23% said it would be the result of rising commodity prices. But 68% said Brexit would drive up food prices, and only 4% said the opposite.
“Rising food prices will be the first real sense of a Brexit impact for many consumers. These latest figures show food prices rising at the fastest rate in over two and a half years. That said, we expect food inflation to hit 3% this year and so household budgets will come under increasing pressure,” Lim said.
“Rising food inflation will be one of the areas families feel the pinch first and with many households ‘just about managing’, discretionary spending power will come under intense pressure — especially for the least affluent.”