Food inflation falls again but business rate hikes could unravel progress
While the latest figures showed food inflation has sharply slowed, higher business rates and the increase in the national living wage could reverse progress, experts have warned.
According to the latest reading from the British Retail Consortium (BRC), food inflation this month dropped to 7.8 per cent down from 8.8 per cent the prior month.
This is the slowest rate at which food prices have grown since July last year and comes after a rough 12 months for both customers and retailers who have battled abnormally high prices at the till.
Food price inflation hit a record high of over 19 per cent earlier this spring after the fallout from the Ukraine and Russian war sent prices skyrocketing as suppliers were squeezed.
Fresh food inflation also slowed to 6.7 per cent down from 8.3 per cent in October and ambient food inflation, such as canned vegetables and fruit, fell to 9.2 per cent down from 9.5 per cent in October.
While this will be welcomed as good news ahead of the Christmas period, Helen Dickinson, chief of the BRC warned progress may be unravelled next year.
She said: “They [retailers] face new headwinds in 2024 – from government-imposed increases in business rates bills to the hidden costs of complying with new regulations.
“Combining these with the biggest rise to the National Living Wage on record will likely stall or even reverse progress made thus far on bringing down inflation, particularly in food.”
Last week, Chancellor Jeremy Hunt rolled out a £4.3bn business rates relief package that included an extension of the 75 per cent rate relief schemes for another year but it was only accessible to 230,000 retail, hospitality and leisure (RHL) properties in England.
Mike Watkins, head of retailer and business insight, NielsenIQ, added: “With the recent slow-down in consumer spending, many non-food retailers will have been reliant on Black Friday to kick starts sales to avoid discounting in December, whereas food retailers will be optimistic that footfall will increase as inflation slows and shoppers get into a festive mood.”
“Across all retail, this year shoppers will be making savings on everyday essentials to help pay for their family Christmas.”
UK consumer price inflation rose by 4.6 per cent in the 12 months to October, down from 6.7 per cent in September – down significantly from last October’s record of 11 per cent.