BRC-Nielsen index shows food inflation slowdown

The research found that annual shop price inflation grew from 3.2% in July to 3.8% in August, yet food inflation was 10%, up from 9.5%.

Because inflation jumped by 2.5% in July, the BRC and Nielsen noted, there has been a definite slowdown.

Fresh food prices grew by 11.9% year-on-year in August, while the ambient sector witnessed growth of 7.3%, according to the index.

Director general at the BRC Stephen Robertson said that there is a degree of "comfort" to be found in the figures.

He commented: "Despite retailers facing rising fuel and electricity bills, overall shop prices in August are well below the official rate of inflation, as retailers shield customers from the full effects of rising costs."

Retailers are having to improve efficiency levels because of intense competition and this is helping to absorb costs, the report suggested.

Senior manager of retail services at Nielsen Mike Watkins commented that shoppers are astute in the market and look to seek out promotional offers.

Year-on-year in Scotland, food prices were up by 4.3%, but the Scottish Retail Consortium argued that inflation is only 2.4% in the country since the end of 2005.