Food price inflation is set to fall sharply over the next year as a result of a better-than-expected grain harvest and a growing squeeze on household incomes, ­according to EFFP.

The agri-food consultancy said it believed food price inflation would fall from a peak of 7% this summer to just below 2% by the end of 2012.

Cereal production in the northern hemisphere had been better than feared, easing pressure on input costs, EFFP said. At the same time, consumer spending was set to be squeezed severely, creating incentives for retailers to keep prices low.

“Retailers will be under pressure because consumers are under pressure,” EFFP senior partner Siôn Roberts said.

Strategies for food companies to address the challenges created by inflation will be debated at EFFP’s ­annual conference on 8 November.