Falling prices of butter, coffee slow food inflation

Food inflation is now lower than any time since 2021, helped by falling prices for key products such as butter and coffee, shows industry data released today (2).

According to a report by British Retail Consortium (BRC), shop price annual inflation eased to 0.2 per cent in June, down from 0.6 per cent in May. This is below the 3-month average rate of 0.5 per cent. Shop price annual growth is its lowest since October 2021.

Food inflation decelerated to 2.5 per cent in June, down from 3.2 per cent in May. This is below the 3-month average rate of 3.0 per cent and is the fourteenth consecutive deceleration in the food category. Inflation is its lowest since December 2021.

Fresh Food inflation slowed further in June, to 1.5 per cent, down from 2.0 per cent in May. This is below the 3-month average rate of 1.9 per cent. Inflation is its lowest since November 2021. Ambient Food inflation decelerated to 3.9 per cent in June, down from 4.8 per cent in May. This is below the 3-month average rate of 4.5 per cent and is the lowest since April 2022.

Helen Dickinson, Chief Executive of the British Retail Consortium (BRC), said, "During the height of the cost-of-living crisis, retailers invested heavily in improving their operations and supply chains to compensate for the impact of global shocks on input costs.

"This is clearly paying off, with shop prices having risen just 0.2 per cent over the past 12 months. Food inflation is now lower than any time since 2021 helped by falling prices for key products such as butter and coffee. Meanwhile, non-food prices went deeper into deflation as retailers tried to drive sales by discounting. This was particularly true for TVs with great deals to capitalise on the Euros fever."

"Whoever wins Thursday’s election will benefit from the work of retailers to cut their costs and prices, easing the cost of living for millions of households. The last few years should serve as a warning that where business costs rise significantly, consumer prices are forced up too.

"The next Government must address some of the major cost burdens weighing down the retail industry, including the broken business rates system, and inflexible apprenticeship levy. By doing so, retailers can invest in lower prices for the future – helping to reduce the cost-of-living pressures that many families face.”