Food inflation decelerated to 5.0% in February, down from 6.1% in January and marks the 10^th deceleration in the food category.

Additionally, fresh food inflation slowed further in February, to 3.4%, down from 4.9% in January, its lowest since February 2022. Meanwhile ambient food inflation decelerated to 7.2% in February, down from 7.7% in January, and the lowest since July 2022.

Chief Executive of the British Retail Consortium, Helen Dickinson said there was good news for consumers.

“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,” said Ms Dickinson.

PRICE CUTS

“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.”

Head of Retailer and Business Insight at NielsenIQ, Mike Watkins added: “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.”

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The latest figures from the British Retail Consortium (BRC) and NielsenIQ retail analysts, show food inflation decelerated to 13.4% in July, down from 14.6% in June – the lowest level since December 2022.

While annual shop price inflation also slowed, at 7.6% in July down from 8.4% in June, levels still remain high.

Helen Dickinson, BRC Chief Executive said the news was positive but there was still cause for concern.

“These figures give cause for optimism, but further supply chain issues may add to input costs for retailers in the months ahead.

“Russia’s withdrawal from the Black Sea Grain Initiative and subsequent targeting of Ukrainian grain facilities, as well as rice export restrictions from India are dark clouds on the horizon.

‘The summer holiday period should help discretionary spend a little and whilst inflation remains high, the outlook is improving’

“We expect some global commodity prices to rise again as a result, and food prices will be slower to fall. Retailers continue working hard to keep falling prices on track.

“Government must also play its part and freeze business rates from next April, or else risk adding a £400m additional pressure on prices,” she added.
Meanwhile, Head of Retailer and Business Insight at NielsenIQ, Mike Watkins said the change in consumer behaviour looks set to remain.

“The summer holiday period should help discretionary spend a little and whilst inflation remains high, the outlook is improving,” he said.

“Shoppers continue to change how they shop as part of their coping strategies. This includes shopping at different retailers, buying lower priced items, delaying spend or only buying when there are promotions. This behaviour looks set to continue.”

The latest BRC and NielsenIQ stats showed that fresh food inflation also slowed further in July, to 14.3%, down from 15.7% in June. Inflation in this category remains elevated, though this is the lowest level since December 2022.

Similarly ambient food inflation decelerated, to 12.3% in July down from 13% in June.

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Soft drinks remain a dominant force in the market with a high proportion of Northern Ireland consumers purchasing each year.

Challenging conditions in 2022 left the sector, like so many others, facing its own hurdles, but producers in the category have shown adaptability and resilience amidst rising costs, labour shortages and upheaval in the supply chain.

Soft drinks sales across the grocery, foodservice and licensed channels hit £19.2bn in 2022, a 25.6% year-on-year rise, worth an impressive £3.9bn at the tills, according to NielsenIQ. Compared to pre-pandemic sales, volume sales have grown by 6%, with discounters, convenience retailers and supermarkets all driving strong growth. 1

And with the heatwave across Northern Ireland at the end of May and into June, hopes will be high that a similar effect will occur for 2023 figures.

Another area of growth was the fruit carbonate drinks, which witnessed sales grow by 12.5% year-on-year in the total market.

Britvic retail commercial director, Ben Parker said flavour innovation is “crucial” in helping to keep consumers excited by soft drinks, particularly as they are dealing with the continued cost-of-living crisis.

“It’s important to offer new products from well-known brands to help maintain basket spend,” he added.

1 Grocery Mults, Impulse & Discounters, NielsenIQ RMS – Foodservice & Licensed CGA – 52 w/e 31/12/2022 v 52 w/e 31/12/2019

YOU CAN SEE OUR SPECIAL FEATURE ON SUMMER DRINKS 2023 IN THE NEXT ISSUE OF NEIGHBOURHOOD RETAILER, COMING SOON!

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The 8.9% figure is up from 8.4% in February and above the three-month average rate of 8.4%.

Food inflation accelerated to 15% in March, up from 14.5% in February and is the highest inflation rate in the food category on record.

According to the British Retail Consortium BRC-Nielsen IQ index, fresh food inflation accelerated to 17% in March, up from 16.3% in February and is the highest inflation rate in the fresh food category on record.

Non-food inflation saw an increase from 5.3% in February to 5.9% in March, above the three-month average of 5.4%. Ambient food inflation accelerated to 12.4% in March, up from 12.2% in February – the fastest rate of increase in the ambient food category on record.

PRICE RISES

Helen Dickinson OBE, Chief Executive of the British Retail Consortium (BRC) warned that shop price inflation has yet to peak.

“As Easter approaches, the rising cost of sugar coupled with high manufacturing costs left some customers with a sour taste, as price rises for chocolate, sweets and fizzy drinks increased in March,” she said.

“Fruit and vegetable prices also rose as poor harvests in Europe and North Africa worsened availability, and imports became more expensive due to the weakening pound.

“Some sweeter deals were available in non-food, as retailers offered discounts on home entertainment goods and electrical appliances.”

She stressed that food price rises will “likely ease” in the coming months, but it is expected that wider inflation will “remain high”.

“Retailers continue to work hard to keep prices, particularly of essentials, as low as possible by expanding value ranges and offering discounts for vulnerable groups,” she added.

‘Since food prices have risen, retailers have seen more visits but less basket spend’

“Government must also minimise oncoming regulatory burdens, as these will serve as a drag on investment and will ultimately contribute to higher prices for UK consumers.”

Meanwhile, Mike Watkins, Head of Retailer and Business Insight, NielsenIQ said: “Inflation continues to have an impact on the spending power of shoppers and increased energy bills from April will add more pressure.

“Since food prices have risen, retailers have seen more visits but less basket spend, as shoppers manage their weekly food bills by shopping little and more often and seeking out the lowest prices. As Easter approaches some high street retailers will also be offering discounts and promotions to encourage customers to spend.”

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The British Retail Consortium (BRC) says consumers will not have an easy ride this year, with the war in Ukraine and volatility in commodity markets dampening consumer confidence.

Shop price annual inflation accelerated to 2.1% in March, up from 1.8% in February, above the 12- and 6-month average price increases of 0.1% and 1.1%, respectively. This marks the highest rate of inflation since September 2011, the BRC says.

The figures show that Fresh Food inflation accelerated in March to 3.5%, up from 3.3% in February. This is above the 12- and 6-month average price growth rates of 0.8% and 2.4%, respectively, and the highest inflation rate since March 2013.

Ambient Food inflation accelerated to 3.0% in March, up from 2.0% in February, above the 12- and 6-month average price increases of 1.2% and 1.8%, respectively. This is the highest rate of increase since April 2019.

Non-Food inflation accelerated to 1.5% in March, up from 1.3% in February. This is above the 12- and 6-month average price decrease of 0.4% and increase of  0.4%, respectively. This marks the highest rate of inflation since February 2011.

Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said: “Consumers were hit once again by rising prices, with March seeing the fifth consecutive month of inflation. There have been mounting cost pressures throughout the supply chain for some time, including rising wages, input costs, global commodity prices, energy, and transport.

“Many of these costs are beginning to be exacerbated by the situation in Ukraine, but the full impact on prices is yet to be seen. Wheat prices have risen sharply, while the rise in oil prices has not only impacted domestic energy costs, but also the costs of fertiliser and transporting goods.

“Our Shop Price Index has been rising more modestly than other inflation measures as retailers were able to limit price rises on many essential goods. By keeping the prices of key items down and expanding value ranges, retailers are trying to support customers most affected by the cost-of-living squeeze, many of whom will face higher energy prices and National Insurance Contributions from 1 April.

“With overall inflation likely to rise even higher according to the Bank of England, consumers will not have an easy ride this year. The war in Ukraine, and volatility in commodity markets is likely to further dampen consumer confidence in the coming months.”

Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, said: “With cost-of-living increases accelerating, the next few months will be a difficult time for consumers.  Rising food prices will start to impact what’s put in the shopping basket so supermarkets will need to adapt ranges to help shoppers manage what they spend on their weekly groceries. Whilst high street retailers will be competing for discretionary spend that’s coming under increasing pressure.”

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