Food prices fall

Householders are benefitting from supermarket price wars, which are having a dramatic impact on the price of food, according to the latest anaylsis from the British Retail Consortium.

The BRC-Neilson Shop Price Index for October reveals that food was 0.5% cheaper last month than in September. Apart from March 2011, when monthly inflation fell by the same rate, this is the fastest fall in food prices since August 2009, when prices fell 1.1%

Analysts say the fall is the result of competition in the grocery intensifying, with retailers stepping up promotional activity to compete for sales growth. It mirrors an overall drop in shop prices, which are down 0.3% in October compared to the previous month, bringing shop price inflation down to 2.1%

Mike Watkins, Senior Manager of Retailer Services at Nielsen said: Retailers in general are offering more discounts than last year and food retailers in particular are looking to encourage loyalty of shoppers over the next eight weeks. They are complementing big promotions on seasonal food and drink with price cuts on frequently purchased grocery items and also with further cash savings at the checkout.

Mike Watkins, Senior Manager of Retailer Services at Nielsen said: Retailers in general are offering more discounts than last year and food retailers in particular are looking to encourage loyalty of shoppers over the next eight weeks. They are complementing big promotions on seasonal food and drink with price cuts on frequently purchased grocery items and also with further cash savings at the checkout.

Stephen Robertson, British Retail Consortium Director General, said the supermarket price war has had a dramatic effect on food prices. He added that the euro zone debt crisis will continue to make currency markets volatile so judging the future path of prices is difficult. Shop inflation should be stable until the end of the year when the effect of last Januarys VAT drop out of annual comparisons.

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