September 6, 2008

Era of Falling Food Prices is Now Over

The era of falling food prices is over and households will have to get used to spending more of their budget at the checkout, experts said yesterday.

A typical trolley of food has risen in price by 8.3 per cent since the beginning of the year, according to new figures.

The price of meat and fish was up 22.9 per cent since January, while the cost of fresh fruit and vegetables was up 14.7 per cent, a study for by retail analysts Verdict Research found.

Seven individual items were up in price by more than 40 per cent.

A pack of four croissants was up 47.4 per cent, bolognese pasta was up 46.2 per cent, 125g of ham was up 45.4 per cent, and skinless chicken breasts were up 42.6 per cent.

Basmati rice was up 42.1 per cent, a medium whole chicken up 41.9 per cent and 400g of mayonnaise was up 40.6 per cent.

The survey comes after high street data from the British Retail Consortium (BRC) released on Wednesday showed the rocketing rate of food inflation slowed markedly last month.

Neil Saunders, consulting director at Verdict Research, said: "Food is one of the biggest components of household expenditure, and with increases like these it's not surprising that consumers are feeling squeezed.

"The good news is that food prices won't keep on going up by as much as this.

"The bad news is that they are likely to remain stable rather than come down.

"Consumers have become used to food prices falling year after year. That era has gone and shoppers are having to adjust to higher prices."

The BRC said food inflation posted its lowest monthly rise for five months to hit 10 per cent in August. The month-on-month rise was 0.3 per cent, down from 1.9 per cent in July and the lowest since March's no-change reading. But the high cost of food is far exceeding the official rate of inflation, with the Consumer Prices Index, which includes shop goods, energy and fuel costs, at 4.4 per cent.

The Verdict survey divided household supermarket purchases into 13 categories, with meat and fish showing the biggest increase in price.

General store cupboard items, including tinned foods, registered the next biggest increase at 15 per cent.

Laundry, washing and toilet paper was up 14.4 per cent, drink was up 6.8 per cent, pet food up 6.5 per cent, cereal and baked goods up six per cent and frozen food 5.8 per cent.

But ready meals were down since January by 0.4 per cent and dairy goods were also down by 1.8 per cent.

The good news is that food prices won't keep on going up by as much as this

Neil Saunders

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