Food prices climb, despite continued shop price deflation

 
Georgina Varley
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Food products saw a price increase of 1.4 per cent over the year to May (Source: Getty)

Shop prices in May have been 0.4 per cent lower than they were the year before, according to the latest analysis by Nielsen and the British Retail Consortium (BRC) published today.

Helen Dickinson OBE, chief executive officer of BRC, said: "Overall prices continue to fall year on year, albeit now at the slowest rate since November 2013. However the trends for food and non-food are now two quite different stories."

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The price of non-food products fell 1.5 per cent over the year to May, whereas food products saw a price increase of 1.4 per cent over the same period.

"With shorter stock turnaround times, the impact of the weaker pound has already started feeding through into food prices; although food price inflation this month is still well below the input cost price increases being faced by retailers," Dickinson said.

"By contrast, heavy discounting in the wake of a weak start to the year and the fact that some businesses are still protected by hedging contracts are keeping non-food prices deflationary for now."

Food product inflation affects so-called "ambient products", such as tinned foods, differently from fresh food items. Fresh food inflation was 1.2 per cent in May, up from 1 per cent the month before, whereas ambient food inflation rose to 1.8 per cent from 0.8 per cent in April.

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Mike Watkins, head of retailer and business insight at Nielsen, said: "Food inflation continues to move up and is currently impacting ambient foods more than fresh as the impact of currency change moves through the supply chain, but still remains lower than the increase in the consumer price index.

"Consumer expenditure on food and drink has held up well so far this year with shoppers visiting supermarkets more often to seek out savings and to find the best value for money, strategies which are helping shoppers to manage changes in their household budget," he added.

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