Britain’s cost-of-living crisis is finally easing.
Food price inflation is falling at an accelerated rate and producers’ prices are dropping for the first time since the pandemic.
At online supermarket Ocado’s half-year results, founder and CEO Tim Steiner said the UK is “definitely over the worst” of food price rises.
Data from market research group Kantar shows food price inflation dropped by 1.6 percentage points to 14.9 per cent over the four weeks to July 9.
The previous four-week period saw figures down 0.7 percent to 16.5 percent. At its March peak, prices soared at a record 17.5 percent.
Fraser McKevitt, head of retail and consumer insight at Kantar, said that while grocery price inflation falling for the fourth month in a row was “good news for many households”, it was still “incredibly high”.
Spending on promotions increased for the first time in two years and now accounts for a quarter of all sales.
Mr McKevitt said that rather than concentrating on across-the-board price cuts, supermarkets were increasingly offering deals through Clubcard, Nectar and other loyalty schemes.
At the same time, Lloyds Banking Group said food and drink manufacturers reduced the prices they charge retailers and wholesalers for the first time since February 2020, after falls in their own costs.
Lloyds said that the sector’s input costs tracker fell from 49.4 in May to 45.7 in June. A score above 50 indicates price rises, a score below points to falls.
As a result, it said that the prices tracker fell from 60 in May to 49.4 in June, which points to the amount being paid by retailers falling.
Annabel Finlay, the managing director at Lloyds, said: “Last month, we saw food and drink producers’ costs drop for the first time since 2016.
“This has continued into June and may give businesses the confidence and financial foundation they need to start reducing the prices they charge customers.
“This could be good news when it comes to the future direction of UK food price inflation. But it will likely be some time before any positive effect is seen on the prices at the till, and much could still change. In what are volatile conditions, there’s no guarantee that manufacturers’ input costs will keep falling.”
Which? Head of Food Policy Sue Davies said that while it was good news that food inflation was falling, prices were “still devastatingly high for millions of people struggling to keep food on the table”.
William Woods, analyst at broker Bernstein, warned that although prices were coming down, “many core contributors to inflation are still feeding through, such as energy and labor costs”.
