Grocery prices have fallen by 1.4% in the last six months, according to The Grocer Price Index, and are expected to drop further as the multiples continue their price wars.
There has been significant further deflation since the first results of the index were published last month (The Grocer December 11, 2004, p27), revealing a 0.6% drop in prices for the six months to the beginning of December 2004.
The index, which is based on the prices of 100 grocery items stocked by the big four retailers - Tesco, Asda, Sainsbury and Morrisons/Safeway - was launched by The Grocer in July to monitor how prices are changing across the industry.
The latest drop in prices was also reflected in Sainsbury’s third-quarter trading statement this week in which it reported deflation of 1.2%. Costs are set to keep falling as cuts of £80m by Tesco and £117m by Asda are put into effect, continuing the downward push on suppliers.
Paul Smiddy at Robert Baird said there had been no stimulus to inflation in fresh foods, continued pressure on suppliers of products such as milk and aggressive behaviour on categories such as beer.