Food inflation “bottoms out”
Published:  05 September, 2012

Food inflation has “bottomed out” according to research by retail bosses. The British Retail Consortium (BRC) claims that while overall inflation has crept up, food inflation has stood still.

According to its BRC-Nielsen Shop Price Index, overall inflation rose to 1.1% from 1.0% in July, while food inflation remained unchanged at 3.1% and non-food deflation slowed to 0.1%

It said the index showed that food inflation appeared to “be bottoming out”, having fallen from 5.4% just five months earlier. The ambient food category reported a rise in its inflation rate, up to 4.0% in August outweighing a further fall in fresh food inflation to 2.5% from 2.8% in July. 
BRC director general Stephen Robertson said: “For all the talk of food prices erupting, August’s food inflation was no higher than the previous month’s two-year low of 3.1%. 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 US 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. More good news is that 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. That is helping keep overall shop price inflation down.”