By Max Clarke

Food price inflation dropped by 0.5% during June, adding a slight downwards pressure to inflation overall.

Food inflation emerged as a particular concern, as high energy and other commodity prices on the world stage, combined with reduced yields of staples saw the prices of many foods jump 10% in a year, adding considerable pressure to the budgets of the economically worse off.

Shop price inflation dipped 0.1% to reach 5.2% overall, though, as Stephen Robertson, Director General of the British Retail Consortium points out, many UK shoppers have found ways round spiraling prices:

“Customers have adapted their shopping habits to higher levels of inflation over the last few months. People are increasingly taking advantage of promotions to help mitigate against the full impact of inflation, so the effect of food inflation faced by consumers will be less than 5.2%. Thirty-nine per cent of all the groceries being bought in supermarkets are now on offer.”

Further easing of inflation will have a positive effect on consumer confidence, which fell last month to near record lows. If consumer confidence picks up, high street spend will inevitably increase, offering a much needed boost to the nation’s long-suffering retail sector, and possibly hastening a retail-led recovery.

Discussing the results of the joint British Retailers’ Consortium/ Neilson research, Mike Watkins, Senior Manager of Retailer Services at Nielsen comments:

“While food inflation moderated a little in July, we have seen sales volumes slow across both food and non-food retailing in recent weeks with shoppers still looking for savings to help pay for increases in other household bills such as transport and energy.

“Retailers have responded with a continuation of price cuts and promotions to stimulate demand at a time when many households are shopping differently to help manage household budgets. Looking ahead, we are optimistic that whilst prices will still be higher than last year, the rate of increase may start to slow later in the year.”

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