UK Food Inflation Falls to 5-Month Low in February

Food inflation in the UK has eased to a five-month low in February, while overall shop price inflation rose to 1.1 percent in the month as shops withdrew extensive discounts after January, according to the British Retail Consortium (BRC) and Nielsen survey.

The BRC-Nielsen shop price index, which measures price changes in BRC-member retail outlets in the country, showed that food inflation fell to 3.5 percent in February from 4.0 percent in January. Non-food prices declined 0.4 percent in February compared with a 1.4 percent fall in January.

"Food inflation has fallen to a five month low, a sign that past falls in commodities such as wheat and corn are continuing to filter through," Helen Dickinson, BRC director general said in a statement.

Dickinson expects food inflation to remain steady in the medium term, although pressures from recent increases in the price of animal feed.

Non-food prices were less deflationary than the previous month, when shops offered deep discounts in the post-Christmas sales.

"The overall inflation figure is up, another sign that discounting is less extensive than it was in January. But it's still well below the Consumer Price Index of 2.7 per cent - a reflection that, with consumer confidence still weak, retailers continue to do all they can to offer the best possible value," Dickinson added.

"Food inflation continues to be volatile due to global factors such as worldwide demand, harvests and commodity prices," said Mike Watkins, head of retailer and business insight at Nielsen.

"We can also expect shoppers to continue to look for more savings in the weeks leading up to Easter and for retailers to respond with a continuation of heavy promotional activity."

On 5 March, BRC reported that retail sales in the country increased at their fastest annual rate in more than three years in February, as dry weather increased consumer footfall on the high street raising demand for goods such as clothes and home furnishings.

Nevertheless, BRC warned that the rise was not a sign of "permanent turnaround" in the retail sector and asked for further government measures to lift consumer confidence.