Inflation: rates are falling but without a luxury in sight
Despite research from the Office of National Statistics (ONS) showing the overall rates of inflation are coming down, the cost of food is still at record-highs.
In April 2023, the ONS recorded inflation rates reduced from 10.1% to 8.7% – the first time the figure has been below 10% since august last year. However, this month the rate of price rises at UK supermarkets hit a new high due to coffee, chocolate, and non-food goods.
The British Retail Consortium (BRC) and NielsenIQ said the overall rate of inflation at grocers reached 9% – while prices for fresh food have fallen marginally, the cost of commodities has jumped. Both companies also examined figures, covering the week between the 1st and 6th of May and found overall food inflation ticked lower from 15.7% in the year to April to 15.4%.
Despite the fall, the figure is the second highest rate of food inflation on record. A decline in the rate of price rises does not equate to food costs coming down, it means they are going up at a slower rate.
Price growth for ambient foods – which are goods that can be stored at room temperature – rose in the year to May from 12.9% to 13.1%. It is the fastest increase on ambient foods prices on record, claimed the BRC and NielsenIQ.
Helen Dickinson, Chief Executive of the BRC, said: ‘The price of chocolate and coffee rose off the back of the ongoing high global costs for these commodities.’
Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, said: ‘Food retailing in particular is competitive, so hopefully the recent price cuts in fresh foods is a sign that inflation has now peaked, albeit ambient inflation may take a little while longer to slow.’
Following this, the government is in talks about asking supermarkets to cap prices on food items to help with the cost-of-living. Over the weekend authorities gathered to discuss a voluntary agreement with major retailers which could see price reductions on basic food items like bread and milk. However, Downing Street sources have stressed that there are no plans for a mandatory price cap.
Health Secretary, Steve Barclay, told the BBC plans are currently ‘about having constructive discussions with supermarkets about how we work together, not about any element of compulsion.’
Against this backdrop, on Monday Sainsbury’s cut the cost of more than 40 of its own-brand products including cheese, yoghurt and cream. Rhian Bartlett, Sainsbury’s Food Commercial Director, said: ‘Whenever we are paying less for the products we buy from our suppliers, we will pass those savings on to customers.’
Image: Nathália Rosa