Food prices are on the rise again thanks to the falling value of the pound, the British Retail Consortium and Nielsen have said.
In January, annual food price inflation jumped to 7.5% from 6.2% in December, the organisation said, following a rise in sterling import prices.
Fresh food inflation jumped to 8.4%, the BRC added, while ambient food inflation also rose to 6.1% in January.
BRC director general Stephen Robertson said: “In particular the fall in sterling has increased overseas demand for UK beef and pushed up the price of some imported commodities.”
In the last few months grocers have been able to deal with the pressure of increasing import prices yet the falling pound will make this more difficult, it added.
According to the BRC, products including ready meals and frozen foods contain a larger amount of ingredients sourced abroad and so will see increasing pressure on margins.
Senior manager of retailer services at Nielsen Mike Watkins concluded: “Despite weakening demand, the depreciation of sterling has now introduced some volatility into food prices and shop price inflation in January remains at similar levels to December.”
GfK NOP said last week that consumer confidence has fallen and shoppers remain pessimistic about the economy.
The Bank of England is set to cut interest rates again today as it looms to balance avoiding deflation and limit the impact of the recession.
