Yahoo Finance Shops slash dairy and egg prices as focus turns to 'profiteering'
A magnifying glass has been turned on UK food retailers as the British Retail Consortium claims that a drop in food prices meant shop price inflation slowed from 9% to 8.4% in June, led by discounts for staples such as milk, cheese and eggs.
Food inflation slowed from 15.4% in May to 14.6% in June the group's monthly shop price index found. This is the second consecutive deceleration in the food category.
"If global supply chain costs continue to fall, we may now be past the peak of price increases," said Mike Watkins, head of retailer and business insight at NielsenIQ.
"However, with most households needing to save money, purchasing behaviour for the rest of this year is still likely to shift towards essential needs with discretionary consumption being deprioritised or delayed.”
Fresh food price inflation slowed from 17.2% to 15.7% month-on-month.
Read more: Jeremy Hunt to meet regulators to stop companies exploiting price rises
“If the current situation continues, food inflation should drop to single digits later this year," said Helen Dickinson, CEO of the BRC.
Despite optimistic data from the BRC, Dickinson pointed out a business rate rise and introduction of border controls in October could hamper the government's ability to tackle inflation into the second half of the year.
Alongside this, even though inflation is slowing, the price of food is still ticking upwards.
"Which?'s latest food and drink tracker shows prices are still rising incredibly quickly," said Sue Davies, Which?'s head of food policy. "Millions are struggling to put food on the table – with some parents telling us they are skipping meals just to make sure their children have something to eat."
The data comes as chancellor Jeremy Hunt is gearing up to meet regulators on Wednesday to discuss managing the impact of price rises for consumers and curbing the potential for profiteering by businesses.
Hunt will meet the Competition and Markets Authority (CMA), alongside Ofgem, Ofwat and Ofcom.
The rate of inflation in the UK remains at 8.7%.
Last week, the Bank of England raised interest rates again to a 15-year high, from 4.5% to 5%, to try to bring inflation under control.
Watch: Cost of living focus for regulators as chancellor targets halving of inflation
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