Food prices rise at third fastest monthly rate in a year

Food prices have risen at their third fastest monthly rate in a year amid hikes in the cost of butter, cheese, eggs and bread, figures show.

The price of other breakfast staples including cereals and coffee are also continuing to soar, taking food inflation to 2.1% in February, a jump from January’s yearly growth of 1.6%, according to the British Retail Consortium (BRC)-NIQ Shop Price Index.

Fresh food prices are now 1.5% higher than a year ago, also a hike from January’s 0.9%, while ambient food inflation increased to 2.8% from 2.5% in January.

Discounting

Overall shop prices remained unchanged at 0.7% lower than last February while the price of non-food products fell to 2.1% lower than a year ago, driven by continued widespread discounting across fashion as retailers tried to entice customers.

BRC chief executive Helen Dickinson said: “While shop prices remained in deflation in February, prices on the month saw the biggest increase in the last year.

“Breakfast, in particular, got more expensive as butter, cheese, eggs, bread and cereals all saw price hikes. Climbing global coffee prices could threaten to push the morning costs higher in the coming months.”

The BRC has already said it expects food inflation to hit 4% by the second half of the year amid geopolitical tensions and the imminent £7 billion increase in costs from the autumn budget.

Growth

Ms Dickinson said: “If Government wants to keep inflation at bay, enable retailers to focus on growth and help households, it must mitigate the swathe of costs facing the industry.

“It can start by ensuring no shop ends up paying more than they already do under the new business rates proposals and delaying the new packaging taxes.”

Mike Watkins, head of retailer and business insight at NielsenIQ, said: “With many household bills increasing over the next few weeks, shoppers will be looking carefully at their discretionary spend and this may help keep prices lower at non-food retailers.

“However, the increase in food inflation is likely to encourage even more shoppers to seek out the savings available from supermarket loyalty schemes.”