Food inflation skyrocketed in July, according to the latest data from The Grocer Price Index (GPI), but analysts predict prices will stabilise in October.

July’s grocery prices were a hefty 4% higher than in June with a trolley of 100 goods from the big four rising from £198.96 to £207.31. The sharp rise is in stark contrast to June, when monthly food inflation of just 0.7% suggested prices had peaked. Compared with last July, food prices are up 7.5%.

But Mike Watkins, senior manager of retail services at Nielsen, predicted the rapid inflationary trend would calm down in the next two months. “Consumers can expect food prices to stabilise from October onwards – although the cost of food will still remain high,” said Watkins. “Compared with the same period last year, inflation will settle down because last autumn was when it started gaining real momentum. But despite higher prices over July, we believe retailers have been continuing to absorb cost increases.” 

The GPI indicated that bakery goods were 32% higher than last year – more than any other category – but Richard Crane, food and agriculture partner at Deloitte, expected bread to be among the categories that would come down in price fastest.

“Wheat-based products should plateau over the coming months as most of the cost pressures have already come through,” said Crane. “However, higher fertiliser and diesel costs are still to come through for fresh produce so they will not drop to the same extent as some of the other foods.” 

Once again, Morrisons had the most success in controlling inflation. Its trolley of 100 items rose just 2% over July. Asda and Sainsbury’s trolleys increased 4% and 5% respectively, while Tesco’s was up 6%. “Morrisons continues to carry more deals than any other retailer – that’s how it is getting more shoppers through its doors,” said Watkins.
category inflation
Bakery32% Biscuits, confectionery & snacks20% Dairy24% Deli17% Dry grocery17% Frozen19% Fruit & vegetables3% Health & beauty3% Household8% Liquor7% Meat, fish & poultry21% Soft drinks2% Source: The Grocer Price Index/ESA