Food price inflation slows to lowest level for 18 months

Friday, January 5, 2024

Food inflation rose in December at its slowest rate in 18 months as retailers cut prices in the run-up to Christmas.

A recent report from the British Retail Consortium-NielsenIQ Shop Price Index shows that grocery prices in the UK rose by 6.7 per cent on an annual basis last month, up from 7.8 per cent in November and the lowest level since June 2022.

Lower prices for wine, port and sherry that have grown during the Christmas period have helped to ease the air for households still reeling from the pressure of the cost of living.

With the relaxation of Covid-related restrictions and the Russian invasion of Ukraine, food price inflation began to pick up, with costs shooting up amid higher energy prices and supply chain disruption.

Unexpected weather events, wage rises in response to labor shortages and Brexit-driven trade barriers have also resulted in higher food prices in Britain.

But inflation has slowed sharply over the last annum amid falling energy and fertiliser costs and the Bank of England's ongoing interest rate rises.

Fresh food inflation peaked at 17.8% in April, but is now 5.4%, the lowest level since May 2022, while the food inflation has fallen to 8.4%.

Nonetheless, the BRC reported that overall store price inflation remained stable at 4.3% in December as non-food inflation rose to 3.1% from 2.5% in November.