There was once again a suggestion that food inflation may have peaked as the price of some fresh food items has been cut.
Business reporter @taaffems
Tuesday 27 June 2023 04:11, UK
Food inflation in the UK has continued to slow from April’s record-breaking rise – but is still up nearly 15% year on year, new retail figures show.
It means prices are still increasing, just at a slower pace than previously.
There was a 14.6% increase in food prices in the year up to June, research from the British Retail Consortium and retail analysts NielsenIQ showed – slightly down from 15.4% recorded in May.
Overall shop prices rose 8.4% over the year to June, a slowdown from the 9% recorded in the year up to May.
Last month’s figures were the second-fastest annual increase ever measured by the trade organisation for UK retailers, second only to April this year.
The slowed pace was thanks to retailers cutting the price of fresh produce including milk, cheese and eggs, BRC chief executive Helen Dickson said.
„If the current situation continues, food inflation should drop to single digits later this year,” she said.
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The idea of food inflation peaking was raised again by the head of retailer and business insight at NielsenIQ, Mike Watkins.
„If global supply chain costs continue to fall, we may now be past the peak of price increases,” he said.
Ms Dickson had said last month there was reason to believe food inflation „might be peaking”.
„However, with most households needing to save money, purchasing behaviour for the rest of this year is still likely to shift towards essential needs with discretionary consumption being deprioritised or delayed,” Mr Watkins added.
The news comes ahead of Chancellor Jeremy Hunt’s meeting with regulators to see what they are doing about the mounting bills customers are facing – and supermarket bosses appearing before the Business and Trade Committee.
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When will food prices start to fall?
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On Wednesday, Mr Hunt is meeting the Competitions and Markets Authority – as well as Ofgem, Ofwat and Ofcom – to ask how they are addressing inflationary pressures being felt by consumers.
The CMA previously announced it was launching an investigation in to whether people are paying higher grocery and fuel prices than they should be.
Morrisons, Sainsbury’s, Tesco and Asda will face questions on food and fuel inflation from committee members – as will the Groceries Code Adjudicator, an independent statutory body that regulates the relationship between supermarkets and their direct suppliers.
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Food inflation has been a multiple of the rate of typical, consumer price index inflation.
According to the Office for National Statistics, it stood at 18.3% in May – down from 19.1% in April and 19.2% in the year to March.
As an energy reliant sector, food sector prices have been heavily impacted by the increase in energy bills that skyrocketed after Putin’s invasion of Ukraine.
Increasing labour costs also helped push food production prices up as unemployment stayed under 4%.