Tasty news for shoppers: food price inflation at its lowest in three years

Published on Tuesday 2 March 2010 21:50

CASH-STRAPPED shoppers can look forward to more money in their pockets after figures released today show food inflation is at its lowest for at least three years.

Details from trade association the British Retail Consortium, (BRC) show food inflation slowed to 1.3 per cent last month from 2.9 per cent in January.

The BRC said the drop is largely being driven by falling fresh food prices, mainly of vegetables and fish.

But Scotland's farming and fishing industry bodies said while the news was good news for consumers, extra costs were carried by their industries who were also having to compete with cheaper imports.

A further drop was stalled by the considerable rise in fruit and convenience food prices.

Sugar and cocoa also rose, by 70 per cent and 19 per cent respectively, making them the highest contributors to annual food inflation in February.

Stephen Robertson, director general of the BRC, 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.

"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.

However, Professor Leigh Sparks, from the Institute of Retail Studies at the University of Stirling, warned the figures merely gave a "snapshot" of what was happening in the economy at a particular time.

"You get surveys every few months saying something like this, but the reality is that commodities and food prices are at the mercy of a range of factors including the (currency] exchange rate and oil prices.

"There is a great deal of unpredictability, therefore the BRC will be 'hoping' this indicates a trend rather than being able to state this with any certainty."

Sarah Anderson, press and parliamentary affairs manager for farming union NFU Scotland, said: "The drop in food inflation may be good for consumers, but the farming industry is all too aware that retail prices do not necessarily reflect on farm incomes.

"The rise in food prices over the last few years has been driven, in many respects, by soaring input costs such as animal feed, fuel and fertiliser, so while farmers' returns may have seemed higher at first glance, they were quickly swallowed up in outgoing costs."

And Bertie Armstrong, chief executive of the Scottish Fishermen's Federation, said: "A statistical price reduction in fish is not good news for us.

"The drop is due to market flooding of fish from Iceland and the north of Norway combined with more cheap imports from the Far East.

"This is a reaction to the recession rather than a preference for these products.

"Prices of home products need to stabilise for the good of the UK industry."