Food price inflation crept up again in June, following a slowdown in May, new figures have suggested.
Food inflation hit 2.7% last month, compared with 2.4% in May, according to monthly figures from the British Retail Consortium (BRC) and Nielsen published today.
Overall shop prices saw an annual deflation for the second consecutive month, down 0.2% in June compared to a fall of 0.1% in May.
Non-food prices deflated 1.9% in June, compared to a fall of 1.5% the month before.
“Food retailers may need to focus on simple price cuts as well as multibuys in order to drive footfall and spend”
Mike Watkins, Nielsen
The BRC’s director general Helen Dickinson said shop prices had fallen at their fastest rate since February 2007, driven entirely by non-food, while food inflation was travelling in the opposite direction.
“Food inflation has edged up marginally since the near three-year low seen in May, driven by slight increases in ambient and fresh food prices. However, I would expect it to remain fairly stable over the medium term.
“The signs are that retailers are continuing to read conditions well and planning their promotional activity accordingly,” she added.
Fresh food inflation was up 2.8% in June, driven by rising prices in the dairy and vegetable categories. Ambient food prices rose 2.5%, fuelled by a sharp rise in the non-alcoholic drinks category.
“After a three-year low point in shop price inflation and a slight recovery in volume growth in the last six months, and with promotion spend plateauing, some seasonal cost price increases are again filtering through to the shelf,” said Nielsen’s head of retailer and business insight Mike Watkins.
“If this trend continues, it will set the shoppers’ agenda for the next six months and food retailers may need to focus on simple price cuts as well as multibuys in order to drive footfall and spend.”