The rate of increase in food prices is at its lowest since October 2022.
According to the latest British Retail Consortium (BRC) and NielsenIQ Shop Price Index, annual inflation decelerated further to 6.9% in August, down from 7.6% in July. This is below the three-month average rate of 7.7%.
The BRC attributed this deceleration to falling food inflation, particularly for fresh produce such as meat, potatoes and cooking oils.
Food inflation decelerated to 11.5% in August, down from 13.4% in July and below the three-month average rate of 13.1%. This is the fourth consecutive deceleration in the food category, leaving food inflation is at its lowest since September 2022.
Fresh Food inflation slowed further in August, to 11.6%, down from 14.3% in July. This is below the three-month average rate of 13.8% and is at its lowest since August 2022, while the ambient Food inflation decelerated to 11.3% in August, down from 12.3% in July. This is below the three-month average rate of 12.2% and is the lowest since January 2023.
Commenting on the changes, chief executive of the British Retail Consortium Helen Dickinson OBE said drop could have been more significant if not for the increase in alcohol duties. “Better news for consumers as shop price inflation in August eased to its lowest level since October 2022. This was driven by falling food inflation, particularly for fresh produce such as meat, potatoes and some cooking oils. These figures would have been lower still had the Government not increased alcohol duties earlier this month.
“Across Non-Food categories, toiletries and cosmetics saw price growth ease as many key components became cheaper, meanwhile inflation for clothing and footwear increased as retailers unwound their extensive summer sales.”
She warned that there could be supply chain issues coming down the line as well as other costs. “While inflation is on course to continue to fall thanks to retailers’ efforts, there are supply chain risks for retailers to navigate. Russia’s withdrawal from the Black Sea Grain Initiative and its targeting of Ukrainian grain facilities, as well as poor harvests across Europe and beyond, could serve as potential roadblocks to lower inflation. A potential £400m hike to business rates bills from next April would certainly jeopardise efforts to tackle inflation unless the Chancellor intervenes.”
Head of retailer and business insight at NielsenIQ Mike Watkins added: “The unpredictable weather of recent weeks has dampened consumer demand with some high street retailers increasing promotional activity and food retailers continuing to extend price cuts, as the inflationary pressure coming from supply chains continues to lessen. Looking ahead, a NIQ survey shows that 60% of households expect to be severely or moderately impacted by rising household costs in the coming months so once back from summer holidays, we expect consumers to remain cautious about discretionary spend even as inflation decelerates.”