Food prices fall for the first time since 2006

THE BRC-NIELSEN shop price index, released in November, has shown a decrease in food prices for the first time in almost a decade.

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Food reported annual deflation for the first time since the series began in December 2006, falling 0.2% in November.


Both the fresh and ambient food categories reported annual deflation, falling 0.3% and 0.2% respectively.


Non-food deflation slowed marginally to 2.9% in November from 3.1% in October.


Helen Dickinson, British Retail Consortium Director General, said “Food prices were deflationary in November – the first time since our records began in December 2006. Non-food prices also fell, compared with last year, meaning overall shop prices have been deflationary for nineteen consecutive months. November equalled the record low deflation of 1.9% reported in July 2014.


“We also saw the first rise in real incomes for over five years. Downward pressure from falling shop prices pushed the overall rate of inflation in the economy below the rise in average wages. With the recovery in the labour market robust, the outlook for further rises in real incomes looks positive.


“Falling commodity prices, particularly oil, suggests the outlook for inflation remains benign. The price of oil, a near five year low, has a significant impact on the costs of producing food, impacting everything from the cost of feed to transport. Given the intensity of competition in the food sector, these savings have been passed on to consumers in the form of lower prices. The strong Pound has also helped keep prices low as imports are now cheaper and it’s worth remembering that the UK gets roughly a quarter of its food beyond its shores.


“At the same time, we’re seeing the big supermarkets investing in price cuts worth millions of pounds during a hugely competitive period in the food market. With food prices down, wages up, a highly competitive market keeping inflation low; and Christmas around the corner, there are plenty of good reasons to assume a strong trading period lies just head of us”.