Food price inflation reaches lowest point in five months

Food inflation fell to 3.5% in February from 4% in January while overall shop price inflation rose to 1.1% in February from 0.6% in January.

Non-food prices fell by 0.4% in February year-on-year, compared with a 1.4% fall in January.

Fresh food inflation also fell to its lowest rate for five months, dropping to 3.4% in February from 3.8% in January. Downward pressure was exerted by the oils and fats, vegetables and fish categories which all reported significant falls in their inflation rates.

The clothing and footwear category reported a sharp deceleration in its deflation rate to 4.2% in February. This compares with January’s 7.7% deflation rate which was driven by seasonal discounts.

The furniture and floorcoverings category reported annual deflation of 0.1% in February after a 0.9% rise in prices in January.

Deflation in the electricals category slowed to 4% in February from 4.7% in January as deflation in audio and vision equipment offset inflation in the home appliances category.

British Retail Consortium director general Helen Dickinson said: “Food inflation has fallen to a five month low, a sign that past falls in commodities such as wheat and corn are continuing to filter through. 

“There are still pressures in the pipeline, especially from recent rises in the price of animal feed, but barring any major shocks I would expect food inflation to stay fairly steady in the medium term.”

She added: “The overall inflation figure is up, another sign that discounting is less extensive than it was in January. But it’s still well below the Consumer Price Index of 2.7% - a reflection that, with consumer confidence still weak, retailers continue to do all they can to offer the best possible value. 

“And our February sales figures, which showed the strongest sales growth for three years, suggest that customers are responding well to this.”

Nielsen head of retailer and business insight Mike Watkins said: “Food inflation continues to be volatile due to global factors such as worldwide demand, harvests and commodity prices and this month we have seen ambient food prices rising less slowly in the stores.

“This will help shoppers in the short term even if the outlook for inflation remains uncertain. We can also expect shoppers to continue to look for more savings in the weeks leading up to Easter and for retailers to respond with a continuation of heavy promotional activity.”