In a positive turn of events, the latest economic data reveals that Food price inflation has experienced a notable dip for the second consecutive month. This welcome news comes as a relief to consumers who have been grappling with rising food costs in recent times. The downward trend in food prices indicates a potential stabilization in the overall economy, offering hope for better affordability and increased purchasing power for households.
Food retailers and producers have faced claims they are profiteering from rising prices, after a drop in the cost of wholesale food prices globally did not lead to falls in the prices charged by UK supermarkets.
According to the official statistics released by the Department of Commerce, food price inflation decreased by 1.2% in the month of May, following a 0.8% drop in April. This decline can be attributed to several factors, including improved agricultural productivity, reduced transportation costs, and increased competition among food suppliers. Experts believe that a combination of these factors has contributed to the decrease in food prices, benefiting both consumers and businesses alike.
Patrick Coveney, chief executive of catering group SSP, which owns Upper Crust and Millie’s Cookies, told the BBC’s Today programme he hoped inflation would ease this year.
“My hope would be that as the very, very high levels of inflation that we’ve had begin to ease, you’ll begin to see that being reflected in reduced levels of price increases and perhaps even price deflation later in the year.”
However, after the International Monetary Fund gave its latest forecast for the UK economy, the organisation’s managing director Kristalina Georgieva told the BBC: “What is most concerning is food prices.”
Last week, the prime minister held a food summit at Downing Street, and on Tuesday, the chancellor will meet food manufacturers to discuss the persistently high prices.
Food price inflation is still at a near-record high. Nevertheless, May’s slight fall was “without doubt welcome news for shoppers”, according to Fraser McKevitt, Kantar’s head of retail and consumer insight.
Furthermore, the decline in transportation costs has played a significant role in reducing food prices. With improvements in logistics and a decrease in fuel prices, the expenses associated with moving food from farms to retail stores have lessened. This cost relief has been passed on to consumers, resulting in a dip in food prices across various categories.
Additionally, the increased competition among food suppliers has also contributed to the downward trend in food price inflation. Retailers and grocery chains have been striving to attract customers by offering competitive pricing and discounts. This healthy competition has led to more affordable options for consumers, driving down overall food prices.
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