By Maximilian Clarke
The long-term upward trajectory in the price of food is showing signs of abating, as the overall rate of shop price inflation dropped to 2.1% in October.
The latest figures from the British Retail Consortium and Nielsen confirm food inflation dropped by 0.8% to 4.2%- well below the current retail price index of inflation which remains elevated by soaring energy costs.
The news will offer some respite for households, whose grocery bills have seen above inflation increases for much of the past four years.
"The supermarket price war has had a dramatic effect,” commented Stephen Robertson, Director General of the British Retail Consortium. “Food was 0.5 per cent cheaper in October than September. March saw an equivalent fall but there's been no bigger month-on-month drop in prices for over two years. As the competitive battle intensifies, retailers are holding down shop prices despite their own costs, including energy, property and what they pay suppliers, going up.
"With the overall Shop Price Index of 2.1 per cent the lowest since December 2010 and less than half the wider Consumer Price Index of 5.2 per cent, it's clear inflation is not coming from shops. Rising utility, fuel and insurance bills are the big pressures on household budgets.
"The euro zone debt crisis will continue to make currency markets volatile. The impact on sterling, and so import inflation, makes judging the future path of prices a tricky business. Shop inflation should be stable until the end of the year when the effect of last January's VAT drop out of annual comparisons."
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