UK food inflation stabilizes as retailers turn to price cuts for consumer relief

28 May 2024 --- UK food inflation is back to normal levels, says the British Retail Consortium (BRC). It plunged to 3.2% this month, down from 3.4% in April and is below the three-month average rate of 3.5%, marking the thirteenth consecutive deceleration in the food category. 

Fresh and ambient food inflations have declined to 2.0% and 4.8% this month respectively.

“Shop price inflation has returned to normal levels, at just 0.6%. This was helped by slowing food inflation, with fresh food inflation falling to its lowest level since November 2021,” says Helen Dickinson, chief executive of the BRC.

“Meanwhile, ambient food inflation remained stickier, especially for sugary products which continued to feel the effects of high global sugar prices.”

Consumer relief
After several months of falling input prices, the F&B industry has witnessed food inflation stabilize.

Meanwhile, retailers continue to offer price cuts to shoppers and reduced inflationary pressure has led to an improvement in shopper sentiment.

However, the unfavorable weather conditions have impacted consumer sales. Retailers plan to continue lowering prices and increase promotional activity to drive demand.

Skyrocketing sugar prices and fruit and vegetable shortages drove UK food inflation last year. Food inflation jumped to 15% and 17% for the fresh food category, the highest data points ever recorded by the BRC, which has been monitoring food prices since 2005.

Sugary products continue to be impacted by high global sugar prices.Meanwhile, UK consumers have been adopting measures to survive rising food inflation, such as cutting back on weekly groceries and dining out. A short respite followed this during September 2023 when a sudden fall in milk, cheese, eggs and fish prices relieved the financial strain on consumers but still left inflation over three times above the UK’s target of 2%.

Call for government support
While Dickinson acknowledges the role of retailers in bringing inflation down, she calls for government support to improve market conditions.

“Future government policy must support this too. Retail plays a key role in every part of the country, from the smallest village to the largest city, employing millions of people, and serving millions more.”

She further flags that as the cost burden of new policies rises due to business rates and packaging taxes, businesses and their customers both are affected. 

“With an election in a matter of weeks, it is vital that parties detail their support for customers and retailers in their upcoming manifestos,” she concludes.

Edited by Insha Naureen