Verdict: Food Price Inflation has Peaked in UK

Research company Verdict has recorded one of the strongest monthly declines in food price inflation in the UK and says that food inflation may finally have peaked.

According to its monthly Food Price Tracker, food prices fell 1.2% from March to April and were up just 7.6% on the previous year – the slowest increase so far in 2009.

Consumers were first hit with higher food prices over a year ago when the rising costs of raw materials and high oil prices added millions of pounds to the nation’s weekly shopping bill, reports Verdict.

Since then, inflation has risen strongly every month, putting many household budgets under strain just as the recession and rising unemployment started to bite.

Verdict’s consumer survey data shows almost 15% more food shoppers than a year ago say they select their grocery store based on price.

Aldi: benefiting from the trend to value shopping

Consumers are also prepared to travel to less convenient locations to save money on their shop. Food discounters such as Aldi, Lidl and Netto have also benefited, with Aldi nearly doubling its share of regular grocery shoppers since 2008.

“For the past year, food prices have weighed heavy on consumer mind and wallet,” said Neil Saunders, consulting director at Verdict.

“With the recession starting to bite and unemployment rising rapidly, a slowing of inflation could not have come at a better time.”

Verdict claims the UK grocery market is finally turning a corner with year-on-year inflation in April at almost half the rate recorded in February.

Lower commodity prices, reduced oil costs and intense competition among retailers are all helping to keep a lid on inflation, it says.

Verdict believes this trend will continue into 2009 and prices will ease significantly before the end of the year. However, it remains far too early to completely call time on inflation, it warns.

"As much as we’d all like to return to the prices we paid for food in 2007, we’re just not going to see those sorts of falls,” said Paul Bashford, retail consultant with Verdict.

“The truth is most consumers will still be paying quite a bit more for their food than they did some years ago; the good news is that by December we believe they’ll be paying less than they did in January.”