Food inflation highest in a year

Food prices have spiked in August

Food inflation is still on the march, according to the BRC. In the UK, prices rose substantially from 1.5 percent in July, to 1.7 percent in August as food inflation continued to put upward pressure on the overall rate while non-food inflation slowed. Alarmingly for consumers, food price inflation leapt from 2.5 percent in July to reach its highest level since July 2009.

The BRC points the finger of blame at the hastily rising prices of commodities like wheat and sugar. Despite the rise, director general Stephen Robertson reassured consumers: "We are nowhere near the return of the double digit food inflation of two years ago." Mr Robertson also highlighted that despite high spikes in food prices, supermarkets and retailers were trying to respond by offering more offers and deals, and reassured that products like milk and bread still remained competitive.

The BRC also stipulated that the rising cost of live stock feed forced the cost of meat to rise in the UK, which would also put a major strain the UK meat market because competitor countries such as Argentina, Australia and the US could offer lower meat stocks.

A bright spot could be the slowing of non-food prices by 2.6 percent, which were slowed due to deflation in clothing prices compared with last year, driven by widespread discounting in footwear and clearance of summer collections . However, with the new 20 percent VAT rate coming into effect in January, non-food inflation is likely to rise sharply in the first quarter of 2011.

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