Food prices on the rise again

The grocery sector continues to fight for sales and market share
The grocery sector continues to fight for sales and market share

Annual food prices have risen for the second month in a row but intense competition among other retailers spelt better news for consumers, figures show.

The BRC-Nielsen Shop Price Index shows food prices rose year-on-year by 0.2 per cent, up marginally from 0.1 per cent in July, after falling every month for the first half of the year.

A fierce supermarket price war has pushed down the cost of groceries for consumers.

Food deflation reached 0.9 per cent in March and remained there for the following two months, according to the index.

The decline narrowed to 0.4 per cent in June.

BRC director general Helen Dickinson said the rise in August was “once again marginal” and likely to be a temporary fluctuation in a longer term downward trend driven by ongoing competition.

It came as the wider index showed its 28th consecutive month of deflation, at 1.4 per cent, unchanged from July but a deepening of June’s 1.3 per cent.

Non-food inflation was at minus 2.4 per cent in August, compared with 2.3 per cent in July and 1.9 per cent the month before.

Ms Dickinson said: “Clothing retailers discounted heavily in an attempt to shift stock with prices falling on average by 5.4 per cent.”

Great deals could be found in books, stationery and home entertainment as prices throughout the category fell on average by 5.2 per cent, the report said.

Food inflation returned as fish, fruit, convenience food and vegetables recorded price rises.

The report said a “relatively benign” economic environment and a fiercely competitive market would see retailers continuing to respond with prices and promotions to maintain market share.