Food inflation cools but Russia’s exit from grain deal poses threat to prices
Food inflation cooled once again in August, new figures out today show, in a sign that cost of living pressures in the UK are gradually starting to ease.
Food inflation fell to 11.6 per cent in August, down from 14.3 per cent in July, according to fresh figures from the British Retail Consortium (BRC).
However, Helen Dickinson, chief executive of the BRC, said that while the dip in inflation is good news for consumers, the battle over rising food costs is far from over.
“Russia’s withdrawal from the Black Sea Grain Initiative and its targeting of Ukrainian grain facilities, as well as poor harvests across Europe and beyond, could serve as potential roadblocks to lower inflation,” she warned.
In July, Russia exited a UN-led deal that enabled the safe export of grain from Ukraine through the Black Sea over the past year.
Both Russia and Ukraine are among the world’s top grain exporters, and Russia’s ongoing invasion of Ukraine has played a key role in rising food prices for UK consumers.
Dickinson also said that shop price inflation – which dropped to 6.9 per cent in August, down from 8.4 per cent in July – would have been lower had the government not increased alcohol duties earlier this month.
Usually, duty paid on alcohol is revalued each year in line with inflation, but it has been either cut or frozen in every budget over the past decade.
“Across Non-food categories, toiletries and cosmetics saw price growth ease as many key components became cheaper, meanwhile inflation for clothing and footwear increased as retailers unwound their extensive summer sales,” Dickinson said.
Earlier this month is was confirmed that the UK’s annual inflation rate fell sharply to 6.8 per cent in July, from 7.9 per cent in June, which was largely driven by a fall in energy prices.
However, core inflation, which strips out volatile which strips out volatile food and energy prices, remained exactly where it was in June, at 6.9 per cent.