pound Inflation money economy web

Supermarket price inflation has rebounded to its highest level since the end of 2013, new Grocer Price Index figures show.

The GPI, collated by Brand View from over 60,000 individual SKUs, jumped 0.7 percentage points in the month to 1 July 2017 to record annual grocery inflation of 1.6% compared with 0.9% in the previous month.

The rate of annual price inflation stands at its highest point since the month to 1 January 2014 and tops the previous 2017 inflationary high of 1.4% recorded in the month to 1 April.

The month marks the fifth consecutive period of grocery inflation, which began in the month to 1 March.

This ongoing period of price inflation has raised the GPI’s overall indexed measure of food prices to its highest level since the month to 1 September 2015.

However, overall prices remain some way short of the record food price level recorded in the month to 1 May 2014 just before the lengthy period of price deflation began in the month to 1 June 2014.

The current index measure of 112.2 (the GPI index was set at 100 in September 2008) is still 4.1% lower than the index score of 117 recorded in May 2014.

The current annual rate of inflation also remains relatively low on a historic basis as supermarkets battle to avoid passing on the full weight of wider inflation to their customers.

Before the deep price deflation from 2014 to 2017, only one month in 2013 recorded lower inflation than the current GPI level of 1.6% and the GPI broke through 4% in 2012.

On an individual supermarket basis, the GPI appears to lend weight to Tesco CEO Dave Lewis’ claim that the supermarket was leading the way in protecting customers from inflationary pressures.

Tesco’s annual rate of inflation stood at 1.2% in the month to 1 July, compared with 1.5% at Sainsbury’s, 2% at Morrisons and 2.2% at Asda. Waitrose, not included in the overall GPI figure, recorded annual price inflation of 1.5%.

Notably, Asda’s rate of inflation jumped by almost two percentage points last month, rising from just 0.3% in the month to 1 June.

Thirteen of the 14 GPI categories are now in annual price inflation, with soft drinks and deli moving to inflation for the first time this year. Only household goods, with prices down 1.7% year on year, remains in negative territory.

The largest price inflation is in meat, fish and poultry - which was down 4.9% just nine months ago - with prices up 3.9% year on year. Other perishable categories are seeing strong inflation, including bakery (up 2.9%) and dairy (2.5%), but there are also strong increases in dry grocery (up 2.4%) and alcoholic drinks (2.8%).

Alcohol prices rose the most on a month-on-month basis (2.4%) followed by baby goods (2.2%) and bakery (1.9%). Overall prices were up 0.3% compared with last month.