Recent data reveals a slowdown in overall food inflation to its lowest point since November 2021.
- Seafood prices remain elevated due to high import and processing costs, particularly during colder months.
- Tea prices are still high, influenced by poor harvests in key growing regions.
- Global coffee prices are nearing record highs, signaling imminent increases.
- Shop price inflation rose for the first time in 17 months, with cautious consumer spending noted.
Food inflation has reached its slowest pace since November 2021, with the rate easing to 1.8% in November from 1.9% the previous month. Although this general slowdown is positive, certain food categories remain costly, especially seafood, tea, and coffee. Seafood costs, as noted by Helen Dickinson of the British Retail Consortium (BRC), are particularly susceptible to elevated import and processing expenses, which are more pronounced during the winter months.
Tea prices continue to soar due to underwhelming harvests in major producing areas, sustaining the high costs. Coffee, experiencing minor relief, is facing pressure again as global prices edge close to historical peaks. This pattern suggests that further price increases are on the horizon for coffee lovers.
The NielsenIQ Shop Price Index highlights that November witnessed a rise in shop price inflation for the first time in over a year, with deflation climbing to 0.6% from 0.8% in October. Mike Watkins from NielsenIQ points out that while buyers are still exercising caution by prioritizing essential goods and restraining from discretionary spending, this deceleration in inflation could enhance consumer confidence ahead of imminent promotional events like Black Friday.
Despite the current alleviation in inflation, the retail industry faces significant challenges. With looming financial pressures, such as increased National Insurance Contributions, heightened business rates, a rise in the minimum wage, and forthcoming packaging levies, the sector anticipates an added £7 billion in costs by 2025. These factors threaten to push product prices higher, a concern echoed by over 70 companies, including major supermarket chains, in a letter to the Chancellor Rachel Reeves.
While overall food inflation shows signs of easing, selective high costs in key commodities and looming economic challenges persist.
