Food Prices Ease in the UK as Retailers Step Up Promotions

Food prices have fallen for the second month in a row as grocers offer more savings through promotions.

New research from Verdict Consulting reveals food prices in May were, on average, 0.4% cheaper than in April.

This is the second month in a row that prices have fallen and means that, since March 2009, food prices have come down by around 1.5%.

However, although food deflation seems to have taken hold, shoppers should not celebrate just yet, as prices still remain some way above where they were last year, warns Verdict. It calculates the average family is still paying some 7.6% more for groceries than they did in 2008.

Neil Saunders, consulting director at Verdict Research, said: “We believe that food prices will continue to fall, but they are coming down very slowly – so slowly in fact some families might not really notice much of a difference each month.”

The leading grocery retailers have increased the amount of promotional activity on foods because they are aware consumers are feeling the pinch, say researchers.

In May 2008, Verdict found that 12% of all food products were on promotion, whereas in May 2009 some 15% were promoted.

However, most of the promotions are multi-buy deals (ie buy three for the price of two) rather than straight price cuts, meaning only consumers who spend and buy more make savings.

In May 2009, around 11% of products in a typical basket of 100 items were part of multi-buy offers, netting an average £8.36 saving on a £150+ shop.