Falling booze and snack prices helped to ease inflation across the big four supermarkets in July.
Price inflation slipped for the second month running, falling to 2.6% from a 2013 peak of 2.8% in May, according to The Grocer Price Index.
Inflation was lowest in the categories that have benefited most from falling commodity costs. In the biscuits, snacks and confectionery category - where manufacturers have seen grain and sugar prices tumble in recent months - inflation has dipped to just 0.3%, from 1% in June.
Lower sugar prices have also helped to bring soft drink price inflation down to 1.8%, from 1.4%. Booze inflation has also fallen to 2.7% - its lowest level since April.
Of the big four, inflation at Asda fell the most in July. It came down from 3.3% in June to 2.9% last month, which is just above the average for the big four supermarkets.
The supermarket has been focusing on keeping down prices of everyday staples, such as bread and milk, through its Asda Price Lock campaign, launched in March.
Asda slashed bakery prices 5.6% month-on-month in July and cut dairy prices by 0.66% - the only one of the big four to cut them.
All the other supermarkets pushed up their dairy prices by more than 1% in July, and Tesco and Morrisons increased them by 3.4% and 4.7% respectively.
Tesco upped the price of four pints of own-label milk by 10p to £1.39 last month - the first price change for the product since December.
Dairy processors have increased the prices they pay farmers for milk in recent months because of rising costs brought on by the long cold winter. “Costs of production, food and fuel increased considerably and difficult weather conditions put them under further pressure,” Adam Mehegan, Dairy Crest’s senior shopper marketing manager, told The Grocer last month.
The prolonged winter has also increased costs for meat suppliers and affected growing conditions for various fruit & veg crops. Price inflation in the fruit & veg and meat, poultry & fish categories remains comparatively high at 4.4% and 6.6% respectively.
The highest inflation rate was recorded at Tesco. Although the supermarket’s inflation fell 0.1 percentage points from June, at 3.5% it remained well ahead of rivals. Sainsbury’s inflation was 2.2% in July and Waitrose’s inflation was 2.4%.
Morrisons kept the tightest lid on inflation - with prices just 0.9% higher than they were a year ago.