Discounting seals trend for fall in food price inflation

Food price inflation fell back in January to 3.7 per cent from 4.2 per cent in December 2011 and is now at its lowest since July 2010.

British Retail Consortium (BRC) director-general Stephen Robertson ascribed the drop to discounting and cheaper commodity costs working through and said further falls were expected.

Commodity prices have fallen by nine per cent over the past six months, according to the Thomson Reuters/Jefferies CRB index.

Mike Watkins, retailer services manager at analyst Nielsen, noted: "Food retailers in particular continued to offer savings in January with price cuts and promotions on everyday items".

A report from Nielsen and the BRC suggested: "Food inflation faced by consumers remains considerably lower than factory gate inflation, demonstrating the fiercely competitive sector as retailers absorb cost pressures to protect market share."

Kantar WorldPanel communications director Edward Garner echoed the findings: "Food inflation will continue to fall in 2012. But averages can be misleading. Despite the recession, people are trading up - for example, to premium own-brand lines."

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