Food inflation falling fast

Period Covered: 01 – 07 August 2023

• Shop Price annual inflation decelerated further to 6.9% in August, down from 7.6% in July. This is below the 3-month average rate of 7.7%. Shop price growth is at its lowest since October 2022.

• Non-Food inflation remained unchanged at 4.7% in August. This is below the 3-month average rate of 5.0%.
• Food inflation decelerated to 11.5% in August, down from 13.4% in July. This is below the 3-month average rate of 13.1% and is the fourth consecutive deceleration in the food category. Food inflation is at its lowest since September 2022.

• Fresh Food inflation slowed further in August, to 11.6%, down from 14.3% in July. This is below the 3-month average rate of 13.8% and is at its lowest since August 2022.

• Ambient Food inflation decelerated to 11.3% in August, down from 12.3% in July. This is below the 3-month average rate of 12.2% and is the lowest since January 2023.

Helen Dickinson, OBE, Chief Executive of the British Retail Consortium, said:

“Better news for consumers as shop price inflation in August eased to its lowest level since October 2022. This was driven by falling food inflation, particularly for products such as meat, potatoes and some cooking oils. These figures would have been lower still had the Government not increased alcohol duties earlier this month. Across Non-Food categories, toiletries and cosmetics saw price growth ease as many key components became cheaper, meanwhile inflation for clothing and footwear increased as retailers unwound their extensive summer sales.

“While inflation is on course to continue to fall thanks to retailers’ efforts, there are supply chain risks for retailers to navigate. Russia’s withdrawal from the Black Sea Grain Initiative and its targeting of Ukrainian grain facilities, as well as poor harvests across Europe and beyond, could serve as potential roadblocks to lower inflation. A potential £400m hike to business rates bills from next April would certainly jeopardise efforts to tackle inflation unless the Chancellor intervenes.”

Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, said:

“The unpredictable weather of recent weeks has dampened consumer demand with some high street retailers increasing promotional activity and food retailers continuing to extend price cuts, as the inflationary pressure coming from supply chains continues to lessen. Looking ahead, a NIQ survey shows that 60% of households expect to be severely or moderately impacted by rising household costs in the coming months so once back from summer holidays, we expect consumers to remain cautious about discretionary spend even as inflation decelerates.”