Fresh food in ‘first-ever’ deflationary month

Fresh food experienced deflation for the first time in the history of the BRC-Nielsen survey, down 0.3% compared to a year ago.

The figure must be set against large rises for the category in February 2009, although low consumer demand is limiting prices in 2010.

Food prices overall rose by just 1.3% in February, a major fall on the January rise of 2.9%.

The inflation growth for overall food is less than for non-food items, at 1.9%, while retail inflation was 1.7%, according to BRC-Nielsen.

Despite the recent VAT increase putting pressure on overall shop price inflation, the currency depreciation and commodity prices hikes of 2009 are now less of a factor, according to Stephen Robertson, director general of the British Retail Consortium (BRC).

“Previous falls in the value of the pound and large commodity price increases, which were pushing up food prices, have now largely worked through,” said Robertson. “Barring any lasting shocks, the price of food should continue to be relatively stable for some time.

Mike Watkins, senior manager, retailer services at Nielsen, commented: “Shoppers have been cautious since the start of the year so retailers are holding back on price increases wherever possible.

“And this time last year, prices in many food categories were on the increase as a result of currency depreciation affecting the supply chain. So against these comparisons, while shop prices have increased a little this month, they are no longer rising as fast.”

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