Food prices increased by a record annual rate in April but “should start” to come down in the next few months as cost pressures continue to ease.
This is according to the latest BRC-NielsenIQ Shop Price Index that showed overall prices in UK shops went up 8.8% last month, down slightly from 8.9% in March following spring discounting in clothing, footwear, and furniture. This drove non-food inflation down from 5.9% to 5.5%.
However, food inflation accelerated to 15.7% from 15.0% in March. Fresh food prices saw a record jump of 17.8% year-on-year, while the price of ambient products rose 12.9%.
The BRC noted that increased production and packaging costs meant that ready meals became more expensive, and coffee prices were also up due to the high cost of coffee beans, as well as key producer nations exporting less. Meanwhile, the price of butter and vegetable oils started to come down as retailers passed on cost savings from further up the supply chain.
“We should start to see food prices come down in the coming months as the cut to wholesale prices and other cost pressures filter through,” said Helen Dickinson, Chief Executive of the BRC. “In the meantime, retailers remain committed to helping their customers and keeping prices as low as possible.”
Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, noted that more retailers were using loyalty schemes or money-off promotions to stimulate sales. “However, with inflation yet to peak and sales volumes in decline in many channels, it’s difficult to second guess the strength of consumer confidence,” he said.
“Given the falls in disposable income, we really need to see CPI back into single figures and a slowdown in food inflation to test shoppers’ willingness to spend.”
NAM Implications:
- Prolonged breath-holding is not recommended while awaiting a genuine lowering of shelf prices.
- i.e. The inflationary price rises will slow to a plateau and remain at that level.
- Apart from some tactical cuts to grab the headlines…
