FDBusiness.com

Rising ingredients and input costs for food manufacturers are being reflected in a sudden rise in food retail prices but it is still a long way short of the hyper-inflation of 2008. According to the British Retail Consortium-Nielsen Price Index, food inflation increased to 3.8% in August from 2.5% in July, the highest since July 2009 when it was also 3.6%.

Non-food inflation slowed to 0.5% from 1.0% in July.

Bread and milk are particularly competitive battlegrounds.

“Non-food inflation continues to fall and is at its lowest since November 2009. But food inflation is up to a 13-month high,” points out Stephen Robertson, director general of British Retail Consortium. “Past rises in the cost of global commodities, such as wheat and sugar, are filtering through to food prices.”

He continues: “But we’re nowhere near the return of the double-digit food inflation of two years ago. Despite its recent increase, wheat is over a third cheaper than its peak in 2008, while oil prices are virtually half of what they were back then.

“In response, retailers are offering more deals. Milk and bread are particularly competitive battlegrounds. A third of groceries are now on promotion and customers are shopping around.”