Food prices fall for the 13th month in a row

SHOPPERS are enjoying the longest fall in food and drink prices on record, official figures reveal.

The cost of food and non-alcoholic beverages has been tumbling for 13 months in a row, following fierce supermarket price wars.

Dairy products such as eggs, cheese and milk have seen particularly sharp price falls – which farmers claim is squeezing their margins and pushing them out of business.

Other essentials such as bread, tea bags and many fresh fruit and vegetables have also dropped in price. The Office for National Statistics (ONS) said it was the longest fall in food and drink prices since records began i n 1989. The second-longest was between 1999 and 2000, when prices fell for 12 consecutive months.

Food prices have been falling partly because cheaper petrol and diesel makes it less costly to transport produce, while global food prices have also decreased.

Cheaper groceries helped to keep inflation at 0.1 per cent in July, along with the falling cost of fuel at the pumps. In contrast, the cost of clothing fell by less than usual last month because the heatwave meant shops did not discount as heavily in their summer sales as they have done in some previous years.

Inflation of 0.1 per cent last month means a typical basket of goods that cost £100 in July 2014 cost only 10p more a year later.

The ONS said it was the sixth month inflation has been at or near zero. ONS statistician Richard Campbell said: ‘While households will have seen individual prices rise and fall, the overall shopping basket bought by the country remains little changed in price compared with a year ago.

‘The latest slight increase is mainly due to clothing, with smaller price reductions in this year’s summer sales. Food and motor fuel prices continue to fall and have helped stop a larger rise in the rate of inflation.’

Low inflation means the Bank of England is less likely to hike interest rates before next spring, experts said. The Bank has indicated that it will raise rates before i nflation reaches i ts target of 2 per cent, but the UK remains a long way off this.

In Scotland, the falling cost of food, along with poor weather, saw grocers suffer their worst sales in 16 years last month.

July’s Scottish Retail Consortium-KPMG report said: ‘ In a month usually rich in picnics and outdoor parties, the cool and wet weather didn’t help the sales of seasonal food.’

David Lonsdale, of the Scottish Retail Consortium, also pointed to a lack of sporting highlights that might have sparked sales on the back of barbecues.

Meanwhile, British farmers claim retailers are forcing them out of business by offering them ever-lower prices for their milk.

Supermarket price wars have pushed down prices, but farmers claim t hey are now being so poorly paid that many are making a loss.