Sharp rises in agricultural commodities drove food price inflation in the past year, but prices are continuing to fall back. Durum wheat, used to make pasta, fell 16.6% last week, and is now more than 30% cheaper than a year ago. Other key grains such as wheat, oats and rye are down 27%, 34% and 31% on last year. Oil also continued to fall, hitting under $55 a barrel this week, the lowest for two years.
These falling prices meant the official factory gate price index fell sharply month-on-month. The price factories paid for their raw materials in October fell 5.6% compared with September, driven mainly by plunging oil prices.
But in a healthy sign for supplier profitability, food output prices were down just 0.4% month-on-month.