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Sharp fall in food price inflation
One of the strongest monthly declines in food price inflation in over a year brings welcome relief for shoppers
Food prices fell 1.2% from March to April and were up just 7.6% on the previous year - the slowest increase so far in 2009. The data, based on Verdict Consulting's monthly Food Price Tracker, indicates that food inflation may finally have peaked, something that will be welcomed by hard-pressed shoppers.Con
Verdict's consumer survey data shows that almost 15% more food shoppers than a year ago say they select their grocery store based on price; consumers are also prepared to travel to less convenient locations to save money on their shop. Food discounters such as Aldi, Lidl and Netto have also benefitted, with Aldi nearly doubling its share of regular grocery shoppers since 2008.
“For the past year, food prices have weighed heavy on consumer mind and wallet” says Neil Saunders, Consulting Director at Verdict. “With the recession starting to bite and unemployment rising rapidly, a slowing of inflation could not have come at a better time”.
With year-on-year inflation in April at almost half the rate recorded in February, the UK grocery market is finally turning a corner. Lower commodity prices, the much reduced cost of oil and intense competition among retailers are all helping to keep a lid on inflation.
Verdict believes that this trend will continue into 2009 and prices will ease significantly before the end of the year. However, it remains far too early to completely call time on inflation.
“As much as we'd all like to return to the prices we paid for food in 2007, we're just not going to see those sorts of falls” says Paul Bashford, Retail Consultant with Verdict. “The truth is that most consumers will still be paying quite a bit more for their food than they did some years ago; the good news is that by December we believe they'll be paying less than they did in January”.
Although there are signs that inflation is finally easing with one of the strongest monthly falls in over a year, worryingly it remains more prevalent in basic items such as meat & fish and fruit & vegetables. All but dairy products increased in price year-on-year, with dairy down 6.2% in April.
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