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Food price inflation eases to nearly two-year low

People buy food at a market in Budapest, Hungary, December 3, 2022. REUTERS/Marton Monus inflation
Shop inflation at two-year low as cost of living squeeze eases. (REUTERS / Reuters)

UK food inflation eased to its lowest rate for almost two years in February as meat, fish and fruit prices fell in a boost for households trying to navigate the cost of living crisis.

The British Retail Consortium (BRC)-Nielsen Shop Price Index showed shop inflation slowed to 2.5% over the 12 months to February, down from 2.9% the previous month.

Annual food inflation eased to 5% in February, falling from 6.1% in January. It was the lowest reading since March 2022, the BRC said.

Compared to January, food prices were actually slightly lower, having fallen 0.1%, its first monthly fall since last September.

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BRC chief executive Helen Dickinson said: “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.

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“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.”

Shoppers can expect lower food prices in supermarkets and shops in the coming months, according to Mike Watkins, head of retailer and business insight at NielsenIQ.

“Shop price inflation has slowed and the underlying trend in prices will be downwards over the next few months,” he said.

“Since the start of the year, food retailers in particular have reduced prices as well as passing on price cuts coming through supply chains,” he added.

A separate report by Kantar Worldpanel, which logs supermarket price and sales data, also pointed to an easing in grocery price inflation.

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That report said promotions increased again over the month after a post-Christmas slowdown, and consumers spent £586m more on them than in February last year.

The end of "Dry January" saw total alcohol sales jump by 18% in volume terms on the previous month, with consumers buying 28% more wine and 16% more beer and lager.

Red wine was a favourite, with 8 million more bottles bought this month than in January.

Liz Edwards, money expert at personal finance comparison site finder.com, said: "It’s great to see food prices finally start to come down month-on-month, even if only slightly. The Bank of England has a close eye on the next Consumer Price Index (CPI) results which will be published later in March, and these will be key in the base rate decision the following day.

"This monthly fall in food prices could be a sign that the UK is finally starting to tame our soaring inflation, and might tempt the BoE to bring the base rate down sooner rather than later."

Watch: Food and fashion push retail inflation towards 'two-year low'

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