Food prices fall, but risks remain

Period Covered: 01 – 07 February 2024

• Shop Price annual inflation eased to 2.5% in February, down from 2.9% in January. This is below the 3-month average rate of 3.3%. Shop price annual growth is its lowest since March 2022.
• Non-Food inflation was unchanged at 1.3% in February. This is below the 3-month average rate of 2.0%. Inflation is its lowest since January 2022.
• Food inflation decelerated to 5.0% in February, down from 6.1% in January. This is below the 3-month average rate of 6.0% and is the tenth consecutive deceleration in the food category. Inflation is its lowest since May 2022.
• Fresh Food inflation slowed further in February, to 3.4%, down from 4.9% in January. This is below the 3-month average rate of 4.6%. Inflation is its lowest since February 2022.
• Ambient Food inflation decelerated to 7.2% in February, down from 7.7% in January. This is below the 3-month average rate of 7.8% and is the lowest since July 2022.

Note: Month-on-month % change refers to changes in the level of prices.

Helen Dickinson, chief executive of the British Retail Consortium, said: “There was good news for consumers as shop price inflation fell to its lowest rate in nearly two years. Food prices fell month-on-month with drops in fresh food including meat, fish and fruit. This was driven by easing input costs for energy and fertiliser while retailers competed fiercely to keep prices down. In non-food, inflation for furniture, electricals, and health & beauty products rose, but the price of clothing continued to fall as many retailers kept promotions in place to entice consumer spend.

“Easing supply chain pressures have begun to feed through to food prices, but significant uncertainties remain as geopolitical tensions rise. Prices of non-food goods will be more susceptible to shipping costs, which have risen due to the re-routing of imports around the Cape of Good Hope. Domestically, retailers face a major rise to their business rates bills in April, determined by last September’s sky-high inflation rate. April’s rates rise should be based on April’s inflation, and the Chancellor should use the Spring Budget to make this correction, supporting business investment and helping to drive down prices for consumers.”

Mike Watkins, head of retailer and business insight, NielsenIQ, said: “Shop price inflation has slowed and the underlying trend in prices will be downwards over the next few months. Since the start of the year, food retailers in particular have reduced prices as well as passing on price cuts coming through supply chains. For high street retailers faced with weaker demand, keeping prices stable over the next few months will be key to encourage customers to spend.”