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UK Food Price Inflation Slows to Two Year Low

Food price inflation in the UK fell slowed to a two-year low in July, easing the pressure on household finances which have been squeezed by a high cost living and stagnant wage growth, according to the latest shop prices index from the British Retail Consortium (BRC). 

Heavy discounting and promotions by embattled retailers, struggling to lure in recession-conscious consumers, has helped drive down shop prices as the British economic downturn sharpens. Falling commodity and oil prices have also helped calm inflation.

"A two-year low for food inflation is good news for hard-pressed households still suffering falls in disposable incomes. Lower shop price inflation is helping to narrow the gap between living costs and wage increases," Stephen Robertson, BRC director general, said.

July food price inflation fell to 3.1 percent, down from June's 3.5 percent.

Robertson warned that this price relief for households may not last.

"Poor harvests, especially of corn and wheat in the USA, are creating a build-up of inflationary pressure. Animal feed has risen sharply in recent months and is likely to affect prices for things like meat, poultry and eggs," he said.

Source: www.ibtimes.co.uk - 1 August 2012