UK supermarket inflation rises to 9% due to coffee & chocolate as government in talks for price cap
The government is in talks about asking supermarkets to cap prices on food items to help with the cost of living.
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The rate of price increases at supermarkets in the UK has hit a new high in the year to May due to chocolate, coffee and non-food goods. Although the cost of fresh food has fallen, the cost of commodities has jumped.
The rate of food price hikes slowed down in May after falling energy prices and commodity costs began to filter through to consumers, retailer trade body the British Retail Consortium (BRC) has found. According to its latest monthly Shop Price Index, which it publishes in conjunction with data analysts NielsenIQ, overall food inflation sat at 15.4% between May 1 and 7 - down from 15.7% the previous month.
Within this statistic, the rate of hikes for fresh food remained higher at 17.2%, but had itself decelerated from April’s rate of 17.8%. According to the latest BRC-NielsenIQ calculations, people in the UK faced food price inflation of 15.4% in the first calendar week of May.
In practice, the figures mean a food item that cost £1 a year ago is now an average of 15p more expensive.
The government is in talks about asking supermarkets to cap prices on food items to help with the cost of living. An agreement, which would be voluntary, would limit the cost of basic foods such as bread and milk.
But the BRC has dismissed caps, stating the government should focus on cutting red tape so resources could be “directed to keeping prices as low as possible”, as opposed to “recreating 1970s-style price controls”.
Overall shop price inflation, including non-food products, climbed from 8.8% to 9% between April and May. The BRC said this figure was also a record high. But the trade body sounded a positive note about the statistics. BRC chief executive Helen Dickinson said there were signs that we could soon see price inflation decelerate in stores.
Helen Dickinson OBE, Chief Executive, British Retail Consortium said: “While overall shop price inflation rose slightly in May, households will welcome food inflation beginning to fall. The slow in inflation was largely driven by lower energy and commodity costs starting to filter through to lower prices of some staples including butter, milk, fruit and fish.
“Conversely, the price of chocolate and coffee rose on the back of the ongoing high global costs for these commodities. While non-food inflation rose, consumers are benefitting from heavy discounts in footwear as well as books and home entertainment.”
Mike Watkins, Head of Retailer and Business Insight, NielsenIQ said: “To help mitigate the impact of inflation, shoppers are saving money by looking for seasonal promotions on the high street and taking advantage of the price reductions offered by supermarket loyalty schemes.
“Food retailing in particular is competitive, so hopefully the recent price cuts in fresh foods is a sign that inflation has now peaked, albeit ambient inflation may take a little while longer to slow.”