Food inflation still high but ‘may be peaking’
Food inflation has eased from April’s record high and may have reached its peak, according to new data.
Research by the British Retail Consortium (BRC) and Nielsen shows a 15.4% rise in the cost of groceries in the year to May – the second-fastest annual increase as measured by the BRC – but down from 15.7% in April.
Fresh food inflation fell in May to 17.2%, down from 17.8% in April.
Overall shop price inflation increased to 9% in May, on an annual basis, up slightly from 8.8% in April.
BRC chief executive, Helen Dickinson, said: “While overall shop price inflation rose slightly in May, households will welcome food inflation beginning to fall.”
She added that there was reason to believe food inflation “might be peaking”.
The slowing was likely a result of lower energy and commodity costs beginning to filter through to lower prices on some staples, such as butter, milk, fruit, and fish.
However, Ms Dickinson warned the government against plans to introduce new price caps on essential items.
Downing Street is drawing up plans to encourage supermarkets to introduce voluntary price caps on food staples in a bid to help with the cost of living crisis.
“While there is reason to believe that food inflation might be peaking, it is vital that Government does not hamper this early progress by piling more costs onto retailers and forcing up the cost of goods even further,” Ms Dickinson said.
Chancellor Jeremy Hunt last week backed interest rate hikes, even if they risk of plunging the UK into recession, in order to combat soaring inflation.