Food inflation slowed to 1.3 per cent in February, from 2.9 per cent in January, according to the BRC-Nielsen Shop Price Index - its lowest rate since the inception of the index in December 2006.

The BRC-Nielsen Shop Price Index reported inflation of 1.7 per cent in February, down from 2.3 per cent in January. The non-food component of inflation remained

unchanged from January, at 1.9 per cent. The fall in the level of inflation was driven by the sharp fall in food inflation.

This time last year, food inflation was nine per cent as the effect of past falls in sterling were at full force. Annual comparisons are certainly against strong rates last year - however, fresh food prices are now falling year on year. In February, the fresh food category reported deflation of 0.3 per cent, the first time in the history of the index that deflation has been reported within food.

Now that the past falls in the value of sterling and some of the sharp movements in the price of commodities are firmly entrenched into food prices, a clearer picture has emerged in which fierce competition in the grocery market is pushing down the price of food.

Stephen Robertson, British Retail Consortium director general, said: “This is great news for customers. Food inflation is now at its lowest for at least three years - 12 months ago it was seven times higher. This drop has largely been driven by falling fresh food prices, mainly on vegetables and fish.

“Previous falls in the value of the pound and large commodity price increases, which were pushing up food prices, have now largely worked through. Barring any lasting shocks, the price of food should continue to be relatively stable for some time.”

Mike Watkins, senior manager of retailer services at Nielsen, said: “Shoppers have been cautious since the start of the year so retailers are holding back on price increases wherever possible. And this time last year, prices in many food categories were on the increase as a result of currency depreciation affecting the supply chain. So against these comparisons, while shop prices have increased a little this month, they are no longer rising as fast.”

Topics