British Retail Consortium reports annual deflation in food prices

The British Retail Consortium has reported annual deflation in food prices for the first time since

The British Retail Consortium has reported annual deflation in food prices for the first time since its monthly survey was launched eight years ago. - Credit: Getty Images/Pixland

Consumers can look forward to shopping for Christmas dinner this year following the first annual food deflation in at least eight years.

The latest shop price index from the British Retail Consortium and Neilsen shows annual food deflation for the first time since it began in December 2006, with a fall of 0.2% in the year to November.

Both the fresh and ambient food categories reported annual deflation, falling 0.3% and 0.2% respectively.

Overall, shops reported deflation for the 19th consecutive month, unchanged at 1.9% in November, following falling commodity prices, a strong pound and fierce competition among the supermarkets.

However, non-food deflation slowed marginally to 2.9% in November from 3.1% in October, the survey added.

The BRC said the prices of the majority of the agricultural commodities it followed had consistently fallen over the year, with some exceptions.

While sugar and cotton prices were weighed down by large global supplies and record global production, coffee, cattle and cocoa prices had spiked due to weather-related conditions restricting supply.

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BRC director-general Helen Dickinson said: “With food prices down, wages up, a highly competitive market keeping inflation low and Christmas around the corner, there are plenty of good reasons to assume a strong trading period lies just ahead of us.”

Mike Watkins, head of retailer and business insight at Nielsen, said: “It’s been another slow start to Christmas trading and momentum on the high street has been reliant on retailers promoting and running discount days to drive shoppers into store.

“With little inflationary pressure we anticipate the good festive deals to continue and the savvy Christmas shopper can expect some very competitive prices across food retailers, in particular for fresh and seasonal foods, where some prices are lower than last year.”