Shop price inflation remains at 0.7% despite surge in food prices
Breakfast, in particular, got more expensive as butter, cheese, eggs, bread and cereals all saw price hikes
Shop price inflation remained in deflation at 0.7% in February, after also falling to -0.7% in January, according to data from the British Retail Consortium.
However, this comes despite food inflation increasing to 2.1% year on year in February, an increase from the 1.6% rise in January and above the 3-month average of 1.8%.
As part of this increase, fresh food inflation was up to 1.5% year on year in February, compared with an increase of 0.9% in January.
Moreover, ambient food inflation increased to 2.8% year on year in February, against growth of 2.5% in January. Again February’s figure was above the 3-month average of 2.7%. nBreakfast, in particular, got more expensive as butter, cheese, eggs, bread and cereals all saw price hikes.
Furthermore, the BRC stated that climbing global coffee prices could threaten to push the morning costs higher in the coming months.
Non-food inflation helped to offset the increase in food as it decreased to -2.1% year-on-year in February, against a decline of -1.8% in January.
Helen Dickinson, BRC CEO, said: “While shop prices remained in deflation in February, prices on the month saw the biggest increase in the last year. In non-food, month on month prices rose as January Sales promotions ended, especially in electricals and furniture. But discounting is still widespread in fashion as retailers try to entice customers against a backdrop of weak demand.
“Inflation will likely rise across the board as the year progresses with geopolitical tensions running high and the imminent £7bn increase in costs from the Autumn Budget and the new poorly designed packaging levy arriving on the doorsteps of retailers. We expect food prices to be over 4% up by the second half of the year.
She added: “If Government wants to keep inflation at bay, enable retailers to focus on growth, and help households, it must mitigate the swathe of costs facing the industry. It can start by ensuring no shop ends up paying more than they already do under the new business rates proposals, and delaying the new packaging taxes.”
