The cost of food in the UK has fallen for the first time in almost two years, according to the latest figures from the British Retail Consortium (BRC). The BRC said that price reductions for dairy, margarine, fish and vegetables, as well as fierce competition among supermarkets, helped to lower the average food basket by 0.1% in September compared with the previous month. This marks the first monthly decline since July 2021.
Food inflation remains high despite the fall
Despite the slight drop in food prices, the annual rate of food inflation remains high at 9.9%, reflecting the impact of the Russian invasion of Ukraine on global energy and commodity markets. The war disrupted supplies of fertiliser, grains and other agricultural products to the rest of the world, pushing up the cost of producing and transporting food. The BRC said that some grocery items, such as meat, poultry, eggs and bread, continued to rise in price last month.
The BRC also warned that there were still many risks to the downward trend in food prices, such as high interest rates, climbing oil prices, global shortages of sugar, and the ongoing supply chain disruption from the war in Ukraine. Helen Dickinson, the chief executive of the BRC, said: “Retailers expect to see a continued deceleration in the rate of shop price inflation over the rest of the year. However, this is not a guarantee and much will depend on how global events unfold over the next few months.”
Overall shop price inflation slows down
The fall in food prices also helped to reduce overall shop price inflation in September, which measures the change in prices of both food and non-food items. The BRC said that shop price inflation slowed down to 6.2% in September, down from 6.9% in August – the lowest annual rate since September 2022.
The BRC attributed this to price cuts for school uniforms and other back-to-school essentials, as well as supermarket own-brand food items. It also said that non-food prices fell by 0.4% in September compared with August, as retailers offered discounts and promotions to attract customers.
The BRC’s figures are based on data collected from more than 500 retailers across the UK, representing about 60% of total retail sales.
Consumers face cost of living crisis
The easing of shop price inflation may offer some relief to consumers who are facing a cost of living crisis amid rising energy bills, taxes and rents. The Bank of England has said it predicts UK inflation figures should fall in the middle of 2023, based on the expectation that the UK government’s financial support for households and businesses would help to reduce energy costs.
However, official figures show that UK consumer price inflation (CPI) rose to 6.7% in August from 6.8% a month earlier, well above the Bank’s target of 2%. The CPI measures the change in prices of a basket of goods and services purchased by households. The Office for National Statistics (ONS) said that transport costs, housing and household services, and recreation and culture were the main drivers of inflation in August.
The ONS is due to release its latest CPI figures for September on October 18.
