UK food inflation drops to lowest point this year

Third consecutive decrease, led by prices of oils, fish and cereal, gives cause for optimism, experts say

Food inflation dropped almost two per cent to 13.4 per cent in July, down from 14.6 per cent in June. Reuters
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Falling prices for staples such as oils, fish and breakfast cereal caused UK food price inflation to slow to its lowest level this year.

Food inflation dropped almost two per cent to 13.4 per cent in July, down from 14.6 per cent in June, according to the British Retail Consortium-Nielsen Shop Price Index.

It is the third consecutive decrease, with inflation now at its lowest level since December last year.

Overall, shop prices were 7.6 per cent higher in July than a year ago, slowing from 8.4 per cent in June, and also the lowest level this year.

Prices fell compared with June for the first time in two years.

“Leading the cuts was clothing and footwear, where retailers mitigated wet weather with larger discounts,” BRC chief executive Helen Dickinson said.

“Food price inflation also slowed to its lowest level this year, with falling prices across key staples such as oils, fats, fish and breakfast cereals.

“These figures give cause for optimism, but further supply chain issues may add to input costs for retailers in the months ahead.

“Russia’s withdrawal from the Black Sea Grain Initiative and subsequent targeting of Ukrainian grain facilities, as well as rice export restrictions from India, are dark clouds on the horizon.

“We expect some global commodity prices to rise again as a result, and food prices will be slower to fall.”

Mike Watkins, head of retailer and business insight at NielsenIQ, said the outlook was improving as “the summer holiday period should help discretionary spending a little”.

“Shoppers continue to change how they shop as part of their coping strategies,” he said.

“This includes shopping at different retailers, buying lower priced items, delaying spend or only buying when there are promotions.

“This behaviour looks set to continue.”

Updated: July 31, 2023, 11:01 PM