Latest figures from BRC-NielsenIQ Shop Price Index confirm that food inflation eased slightly this month, adding to hopes that the rapid rise in grocery prices may have reached its peak.
After ONS data last week pointed to a slight easing, the BRC analysis shows annual food inflation fell from 15.7% in April to 15.4% in May. This was driven by fresh food inflation, which decelerated from 17.8% to 17.2%. However, ambient food prices inflation accelerated to 13.1%, up from 12.9% the previous month.
BRC Chief Executive, Helen Dickinson, noted that the slowdown in food inflation was largely being driven by lower energy and commodity costs starting to filter through to lower prices of some staples, including butter, milk, fruit and fish. However, the price of chocolate and coffee rose off the back of the ongoing high global costs for these commodities.
She added: “Fierce competition between supermarkets has helped keep British food among the cheapest of the large European economies. While there is reason to believe that food inflation might be peaking, it is vital that government does not hamper this early progress by piling more costs onto retailers and forcing up the cost of goods even further. The biggest risk comes from policies such as the incoming border checks and reforms to packaging recycling fees.”
Overall, the BRC’s shop price inflation figure accelerated from 8.8% to 9.0% in May, after non-food prices rose 5.8% in May, up from 5.5% in April.
Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, commented: “To help mitigate the impact of inflation, shoppers are saving money by looking for seasonal promotions on the high street and taking advantage of the price reductions offered by supermarket loyalty schemes. Food retailing, in particular, is competitive, so hopefully the recent price cuts in fresh foods is a sign that inflation has now peaked, albeit ambient inflation may take a little while longer to slow.”
NAM Implications:
- Unfortunately, falling inflation does not necessarily mean falling shelf prices (ask any cash-strapped consumer).
- Simply means prices are not rising as fast…
- Meanwhile, ‘permanent’ shopping behavioural change…
- …as shoppers migrate to own-label and discounters…
- …optimising the use of loyalty card promotions as they go.
