Shoppers are finally catching a break at the checkout, with food prices rising at their slowest rate in nearly two years. The cost of staples such as margarine and sugar have gone down, while supermarket price wars have driven down prices in the year to June, the industry says.
Inflation in the UK overall has fallen to 2.6% in the year to June, down from 2.8% in May, according to the Office for National Statistics (ONS), driven largely by lower fuel and food prices. Lower diesel prices – falling for the first time since the start of the war in the Middle East – also pushed inflation down. Clothing costs fell as well due to summer sales, with many retailers offering larger discounts than last year.
“Food inflation slows to near two-year low but analysts warn of temporary relief as energy prices loom.”
Food and non-alcoholic beverage inflation fell by 0.2% month-on-month, with sugar, chocolate and confectionery seeing the largest drop in price. Beef and veal price inflation eased from 9.4% in the 12 months to May to 5.1% in the year to June, while edible offal slowed from 9.2% to 3.4% over the same period. Some items were cheaper outright: pizza and quiches fell by 6.7% in the year to June, and margarine dropped by 1.9%.
June's figure will be welcomed by new Prime Minister Andy Burnham and his government, but analysts warn the fall is temporary. Higher energy prices in July are expected to push inflation back up. The recent resumption of hostilities in the Middle East and a new jump in crude oil prices means inflation could spike again in the coming months. Food inflation often has a lag of up to 13 months due to the supply chain, so any effects from the war in Iran could still be yet to come.
The British Retail Consortium (BRC) said lower food inflation was driven by “intense competition between supermarkets”. But BRC economist Harvir Dhillon warned: “If retailers are to keep prices affordable for consumers in the long run, the Government needs to take practical steps to lower the everyday cost of doing business. Andy Burnham has taken immediate action to ease pressure on household budgets; he must now look to do the same for businesses.”
Burnham has pledged to make the cost of living a priority for his government. New Chancellor John Healey said the lower rate was “news families want to hear” but “there is much more to do”. On Wednesday morning, the government announced that the bus fare cap in England will be brought back down to £2 in January.