Further deflation for food prices

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Food prices experienced yet more deflation in November. 

According to the BRC-Nielsen Shop Price Index for November 2015, the food category reported annual deflation of 0.3% in November from the 0.4% fall in October. This is slightly below the three-month average of 0.4%, but ahead of the six-month average of -0.2%.

Overall shop prices reported deflation of 2.1% in November from a 1.8% decline in October, a joint record low.

Deflation in the Fresh Food category accelerated to 1.3% from 1.0% in October. Five sub-categories reported annual deflation in November, with the greatest declines seen in the Meat, Oils and Fats and the Milk, Cheese and Eggs categories.

Helen Dickinson, BRC chief executive, said: “Food prices fell by 0.3% as the impact of past falls in oil, weaker demand in emerging markets and a strong pound, helped support a continued deflationary environment. Lower commodity prices will help food retailers to continue to offer the best possible prices. Coffee, lean hogs, soybean, and cattle feeder all demonstrated double-digit declines in the 12 months to the end of our survey period.”

Mike Watkins, head of retailer and business insight at Nielsen, added: “For the best part of two years we have had shop price deflation, which has helped overall consumer spend remain buoyant, and with consumer confidence back to an all-time high, shoppers are now feeling more optimistic about spending. Falling prices across the high street and food retailers in November will be another welcome boost for shoppers as they plan their Christmas spending.”

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