Food inflation falls to lowest level this year in positive sign

JACK BARNETT

FOOD INFLATION has slipped to its lowest level this year and has fallen for the third month in a row in a sign that the UK could through the worst of the cost of living crisis, a new survey out today shows.

The cost of groceries climbed 13.4 per cent over the year to July, down from an increase of 14.6 per cent in the previous month, according to the British Retail Consortium (BRC).

Last month’s decline does not mean food prices are falling, just that the pace at which they are rising has slowed. Over the last month, they actually lifted 0.3 per cent.

The BRC’s data tends to be seen as an early guide as to where official numbers from the Office for National Statistics are headed.

New inflation data for July is released in the middle of this month and is likely to slow from June’s 7.9 per cent reading.

“Food price inflation also slowed to its lowest level this year, with falling prices across key staples such as oils, fats, fish, and breakfast cereals,” Helen Dickinson, chief executive of the BRC, said.

Weakening grocery price growth is a boost for the Bank of England, which has been blindsided by higher-than-expected inflation for nearly two years. In the May monetary policy report, the Bank admitted that “almost all of the upside news in CPI inflation data since the February report has been accounted for by developments in food”.

Dickinson urged policymakers not to declare victory over food inflation just yet.

“Further supply chain issues may add to input costs for retailers in the months ahead. Russia’s withdrawal from the Black Sea Grain Initiative and subsequent targeting of Ukrainian grain facilities, as well as rice export restrictions from India are dark clouds on the horizon,” she said.