Fall in the price of food staples fuels hope inflation has peaked

PRICES of food staples such as pasta, sugar and vegetable oil have dropped in a sign that the record high cost of groceries is on its way down.

Analysis shows that all of the major supermarkets have cut the price of basic items in the past week.

Consumer experts say the drop is a signal that runaway food inflation at 19.1 per cent may have peaked.

In Aldi and Lidl, own label penne pasta fell by five per cent to 75p a pack and by six per cent to 89p in Morrisons.

Tesco cut spaghetti prices by five per cent in the past month, according to The Grocer.

Its weekly Key Value Items price checker found vegetable oil has been cut by 14p a litre in Tesco and Aldi.

Sugar prices, which hit a 10-year high on commodity trading in March, have started to come down, but only by a few pence with a kilo pack down from £1.09 to £1.05.

These three items, like so many others, were affected by increased fuel and energy prices, the war in Ukraine and freak weather conditions in their prime growing regions.

The price cuts are relatively small but it means they are not going up and if food inflation has peaked then it could be a sign that further discounts may be ahead. The Office for National Statistics pointed to falls in sugar prices as a factor in last month’s drop in inflation to 8.7 per cent in the year to April – down from 10.1 per cent in March but above the 8.2 per cent figure expected.

Analyst Clive Black, of Shore Capital, said prices on supermarket shelves reflected commodity price drops last year that are now filtering through to the consumer.

Meanwhile there was also more positive news for the economy from Barclays.

The bank’s analysis of latest

figures found that May’s long bank holiday weekends provided a welcome uplift to the hospitality and entertainment sectors.

Both digital content and takeaways also enjoyed their highest growth so far this year.

Spending on groceries surged 8.9 per cent year-on-year – the highest growth in the category in over two years as the Coronation bank holiday weekend and Eurovision saw consumers buying food and drink for street parties and celebrations at home.

There was also more positive news for airlines with spending on flights abroad up by a third (34.4 per cent), as 13 per cent say they have set money aside to enjoy a foreign holiday this year.

Consumer confidence endures with Britons generally feeling confident in their finances (64 per cent) and ability to live within their means (68 per cent).

Confidence in the future of the UK economy increased too, rising from 25 per cent to 28 per cent.

Esme Harwood, a director at Barclays, said: “Consumers are still paying close attention to their everyday spending. However, the growth witnessed at pubs, airlines and entertainment venues shows that Brits are still finding room in the budget to enjoy nights out and holidays.”

There is further encouraging news for hard-hit consumers. New figures suggest sugar, pasta and vegetable oil have all fallen in price at big stores in the past week.

Before anyone celebrates, it must be acknowledged that the three staples have not recovered from massive hikes caused by soaring energy prices, weather conditions and the war in Ukraine.

However, the analysis by The Grocer magazine does suggest the runaway food inflation of the past 12 months may have peaked. It is just a few pence here and there but could indicate better news ahead on inflation and growth.We can only hope so.