A new report shows falling dairy and meat costs saw food price inflation drop to its lowest level for 14 months in June.
Reductions in fresh produce caused a 5.6 per cent rise in the cost of food last month compared to a year before, according to the latest British Retail Consortium (BRC) – Nielsen Shop Price Index.
The figure was down from 6.4 per cent in May as retailers slashed prices in the face of weak consumer spending, while the rebound in the value of the pound cut the cost of imports and reduced overseas demand for UK produce.
And the report predicted that food price inflation was likely to keep falling.
Mike Watkins at Nielsen said: “Shoppers are now seeing more savings on their supermarket till receipts as food inflation continues to slow, with the falls in fresh food inflation being most obvious. Weak consumer confidence has led to promotional activity being higher in both non-food and food compared with this time last year but the recent good weather has certainly helped shoppers spend again and take advantage of these promotions.”
Non-food deflation slid to 1.9 per cent on last year, compared with 1.3 per cent the previous month, with the biggest falls in clothing, electricals and footwear.
Overall shop price inflation, at 0.7 per cent, is the lowest since December, compared to 1.3 per cent in May.
Rises in food costs have slowed dramatically from last August’s peak of ten per cent, which was driven by huge increases in oil prices.
While crude has been on the rise in recent months, it is still less than half the 140 dollars a barrel level at its height last year.
The report said food costs are expected to continue to slide, having now fallen for three consecutive months.
Falls were attributed to a slowing in fresh food annual inflation, to 5.5 per cent in June from 6.7 per cent in the previous month, as well as stagnation in the non-fresh category. Clothing and footwear experienced another large drop in annual prices – of 6.5 per cent – as discounts continued on the high street.