Food inflation fell to 11.5% this month, down from 13.4% in July, according to the latest data from the British Retail Consortium.
Shop price inflation also dropped to 6.9% in the year to August, down from from 8.4% last month as price rises have slowed to their lowest level since October 2022.
The BRC-NielsenIQ Shop Price Index found that fresh food inflation fell to 11.6%, a drop from 14.3% in July, while ambient foods dipped 1% to 11.3%.
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BRC chief executive, Helen Dickinson, said this comes as “better news for consumers”, with the fall in shop price inflation “driven by falling food inflation, particularly for products such as meat, potatoes and some cooking oils”.
However, the current rate of price rises is still faster than the growth of wages, with average total pay only up by 8.2% from April to June, according to the Office for National Statistics (ONS).
Dickinson also noted: “These figures would have been lower still had the government not increased alcohol duties earlier this month.”
Earlier this month, the government set out new principles which would see alcohol tax levied according to a drink’s strength to support “wider UK tax and public health objectives”.
According to the Wine and Spirits Trade Association (WSTA), port and sherry will see some of the highest increases, with £1.30 and 97p more tax per 75cl bottle, respectively.
Dickinson added: “While inflation is on course to continue to fall thanks to retailers’ efforts, there are supply chain risks for retailers to navigate. Russia’s withdrawal from the Black Sea Grain Initiative and its targeting of Ukrainian grain facilities, as well as poor harvests across Europe and beyond, could serve as potential roadblocks to lower inflation.
“A potential £400m hike to business rates bills from next April would certainly jeopardise efforts to tackle inflation unless the chancellor intervenes.”
