Food inflation begins to fall and may have finally reached its peak

There are hopes food inflation may have finally reached its peak amid the cost of living crisis.

A survey by the British Retail Consortium (BRC) and Nielsen found food inflation fell to 15.4% in the year to May.

This is slightly down from 15.7% in April, after several months of increases.

Despite this people will still be feeling the squeeze while grocery shopping, as people who spent £20 on a food shop a year ago will still be paying slightly more than £23 for the same items on average.

BRC chief executive Helen Dickinson said: ‘While overall shop price inflation rose slightly in May, households will welcome food inflation beginning to fall.

‘The slow in inflation was largely driven by lower energy and commodity costs starting to filter through to lower prices of some staples including butter, milk, fruit and fish.

‘Conversely, the price of chocolate and coffee rose off the back of the ongoing high global costs for these commodities.

‘While non-food inflation rose, consumers are benefiting from heavy discounts in footwear as well as books and home entertainment.

‘Fierce competition between supermarkets has helped keep British food among the cheapest of the large European economies.

‘While there is reason to believe that food inflation might be peaking, it is vital that Government does not hamper this early progress by piling more costs onto retailers and forcing up the cost of goods even further.

‘The biggest risk comes from policies such as the incoming border checks and reforms to packaging recycling fees.’

Although May’s figure is a little lower than that of April, the BRC says it is still the second fastest annual increase ever recorded.

The price of fresh food increased by 17.2% in the year to May, down from 17.8% in April.

But inflation of shelf-stable food rose from 12.9% in April to 13.1% in May, and overall inflation in shops rose from 8.8% to 9%, which is an all-time high.

Mike Watkins, head of retailer and business insight at NielsenIQ, said: ‘To help mitigate the impact of inflation, shoppers are saving money by looking for seasonal promotions on the high street and taking advantage of the price reductions offered by supermarket loyalty schemes.

‘Food retailing in particular is competitive, so hopefully the recent price cuts in fresh foods is a sign that inflation has now peaked, albeit ambient inflation may take a little while longer to slow.’

The government is said to be planning to encourage supermarkets to impose voluntary price caps on essential items such as bread and milk to help people through the cost of living crisis.

But the UK’s major supermarkets have hit back at this suggestion, while at least two cabinet ministers are also said to oppose the policy.

Andrew Opie, director of food and sustainability at the BRC, said: ‘This will not make a jot of difference to prices.

‘As commodity prices drop, many of the costs keeping inflation high are now arising from the muddle of new regulation coming from government.

‘Rather than recreating 1970s-style price controls, the government should focus on cutting red tape so that resources can be directed to keeping prices as low as possible.’

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