Food inflation has reached a record low, falling to just 0.1% – the lowest rate since December 2006 – according to new figures released this week by the British Retail Consortium (BRC).
This record rate was driven by the fact that the all-important fresh food category witnessed deflation for only the second time in nearly eight years.
But there are some foods whose prices may soon rise. While the study found that world wheat production was forecast to reach a new record high this year, further pushing down prices, there was growing demand for chocolate from Asia and other emerging markets, and prices for cocoa were at a three-year high. There are also fears that the outbreak of Ebola in West Africa could also impact on cocoa supplies globally.
Helen Dickinson, BRC director general, said: “For the 18th month in a row, shop prices have reported deflation, matching its lowest rate on record of 1.9% experienced in July 2014.
“Food inflation edged down to its lowest level on record of 0.1%. For the first time since February 2010, fresh food experienced deflation, with milk, cheese, eggs, vegetables and convenience food all cheaper than they were a year ago. This should mean great deals for shoppers as they start stocking up on seasonal fare.
“With a backdrop of falling commodity prices, cheaper imports and benign inflationary pressure in the supply chain, we expect the great deals to continue in the medium term, bar any supply chain shocks.
‘’With the current competitive environment, retailers are passing most of these savings on to consumers. As Christmas swiftly approaches, there is plenty of evidence to suggest that budgets will go a little bit further this year.”