The worst of the food price rises seems to be over as the latest pricing data from The Grocer reveals that supermarkets have kept food inflation in check for the second month in a row.
April's food prices were only 2.8% higher than in March with the average price of a trolley of goods rising from £186.84 to £192.15, according to The Grocer Price Index, which is based on a trolley of 100 grocery items.
Asda was the most successful at keeping a lid on prices. Its trolley rose just 2% in price, while Tesco's was up 2.7% and Morrisons 2.8%. Sainsbury's prices rose the most with a 3.8% jump.
Despite wheat costing 85% more than a year ago and the price of oil leaping 25% over the past four months, retailers continued to shield shoppers from the full extent of the commodity price hikes.
"Food prices have gone up, but the retail price of food is rising much more slowly than the farmgate price of commodities such as wheat and milk," said Stephen Robertson, BRC director general.
"Retailers are protecting customers from the full force of increasing commodity, energy and transport costs by absorbing most of those increases themselves, even when it's at the expense of their own margins."
Waitrose boss Mark Price claimed last week that food prices should be significantly lower by the autumn. Most of the price rises had now been pushed through, added Simon Peacock, analyst at Catalyst Corporate Finance. "The worst of the food price hikes are now over," he said. "Manufacturers have passed on their price rises and retailers are in the position to simply fine-tune their prices for the summer."
Over March, an unprecedented level of promotional activity helped retailers control inflation. The big four sustained this momentum over April, despite the absence of events such as Easter and Mothers' Day, a spokeswoman at Nielsen said.is a price war brewing?
Supermarkets have played down speculation of a looming price war.
It follows a warning by analysts this week that the current economic climate could impact retailers and force them to slash prices.
A report by Oriel Securities described the "underlying situation" for the industry as "currently parlous". If volumes fell, it warned, supermarkets could turn to price to redress the balance.
"Input price hikes are not being passed on and in the absence of a 'fall guy' (a major materially underperforming the industry average from a sales perspective), we fear a genuine battle on price is brewing," the report claimed.
Supermarkets dismissed the speculation. "This is a very competitive market," said a Morrisons spokeswoman. "We are all keen to offer the best value to customers and we'll continue to do so. As far as we're concerned, nothing has changed."
An Asda spokesman added: "It's an incredibly competitive industry and we don't envisage a price war."