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Food prices set to bottom out

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05/09/2012
British shop price inflation picked up slightly in August, to a 1.1% year-on-year rate, according to the latest data released by the British Retail Consortium (BRC).

That as non-food costs dropped at a slightly lesser rate when compared with prices a year ago, of -0.1% versus -0.3% in July. The pace of food inflation, on the other hand, remained steady, increasing at a 3.1% clip.

For Stephen Robertson, BRC Director General: “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 USA 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.”

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