Food inflation dropped to 5% in February as it fell to its lowest point in two years, but the British Retail Consortium (BRC) has cautioned that “significant uncertainties remain”.
Data from NielsenIQ showed that food inflation in February fell from January’s 6.1%, marking its tenth consecutive deceleration in the food category.
Fresh food slowed even further in February, dropping to 3.4%, down from 4.9% in January, and below its 3-month average rate of 4.6%.
BRC chief executive Helen Dickinson said: “Food prices fell month-on-month with drops in fresh food including meat, fish and fruit. This was driven by easing input costs for energy and fertiliser while retailers competed fiercely to keep prices down.”
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However, Dickinson warned that easing prices may still be at risk from “significant uncertainties remain as geopolitical tensions rise“.
“Easing supply chain pressures have begun to feed through to food prices, but significant uncertainties remain as geopolitical tensions rise. Prices of non-food goods will be more susceptible to shipping costs, which have risen due to the re-routing of imports around the Cape of Good Hope.
“Domestically, retailers face a major rise to their business rates bills in April, determined by last September’s sky-high inflation rate. April’s rates rise should be based on April’s inflation, and the Chancellor should use the Spring Budget to make this correction, supporting business investment and helping to drive down prices for consumers.”
NielsenIQ head of retailer and business insight Mike Watkins said: “Shop price inflation has slowed and the underlying trend in prices will be downwards over the next few months.
“Since the start of the year, food retailers in particular have reduced prices as well as passing on price cuts coming through supply chains. For high street retailers faced with weaker demand, keeping prices stable over the next few months will be key to encourage customers to spend.”
