Food price inflation is set to rise in the coming months as the affects of a poor harvest hit retailers, the British Retail Consortium (BRC) warned today.
Although food inflation remained unchanged in August from the previous month’s level of 3.1 per cent, this is likely to rise over the rest of the year, affecting overall shop price inflation.
Last month, overall shop price inflation increased 0.1 per cent on July to 1.1 per cent while non-food deflation slowed from 0.3 per cent in July to 0.1 per cent and Stephen Robertson, BRC Director General, said that these figures, which are no higher than July’s two-year low, will relieve consumers if only in the short term.
“Non-food goods are cheaper than they were a year ago for the seventh month in a row, as retailers cut prices to generate much needed sales,” he said.
“That is helping keep overall shop price inflation down.
“But, with price pressures from global commodities in the pipeline, this is likely to be food inflation bottoming out.
“The price of products such as bread and pasta is already rising more quickly as increasing wheat costs from poor harvests in the USA filter through. We are likely to see more of that effect not less in future months.
“But intense retail competition in the face of falling disposable incomes, will continue to protect customers from the worst effects of these rising costs.”
Last month, consumer confidence remained static according to the GfK NOP UK Consumer Confidence Index and GfK’s Managing Director Nick Moon explained at the time that “confidence has never been so low for so long – even during the dark days of the 2008-2009 recession.”
Commenting on today’s figures, Mike Watkins, Senior Manager of Retailer Services at Nielsen said: “It’s been a roller coaster year for inflation and we know that shoppers remain cautious and are probably more inclined to save than spend any small increase in household income.
“So, despite lower inflation in food, slight deflation in non-food and after one of the most intense periods of vouchering from supermarkets during the summer, retailers will now need to focus on limiting any price increases for the rest of the year, as underlying demand is still weak.”