Food price inflation outpaces wage growth as retail inflation slows

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【Summary】Food prices continue to rise faster than wages, according to new data. The British Retail Consortium (BRC) reported that overall food inflation in August was 11.5%, down from 13.4% in July. However, average total pay only grew by 8.2% from April to June. Fresh food inflation fell to 11.6% in August, while inflation for ambient foods fell from 12.3% to 11.3%. Although retail inflation has dropped, prices are still increasing, just at a slower rate.

FutureCar Staff Aug 29, 2023 12:17 AM PT

Food price inflation outpaces wage growth as retail inflation slows

New data has revealed that food prices are continuing to rise at a faster rate than wages. The British Retail Consortium (BRC) reported that overall food inflation increased by 11.5% in August, a slight decrease from the 13.4% recorded in July. However, the latest data from the Office for National Statistics (ONS) showed that average total pay only grew by 8.2% from April to June.

In August, fresh food inflation dropped to 11.6%, down from 14.3% in July. Similarly, inflation for ambient foods, which are stored at room temperature, decreased from 12.3% in July to 11.3% in August. Despite these declines, the BRC highlighted that price rises in shops have continued, albeit at their lowest rates since October last year.

While prices rose by 6.9% in the year to August, this was a decrease from the 8.4% increase seen in July. It is important to note that a drop in retail inflation does not necessarily mean that items are becoming cheaper, but rather that prices are increasing at a slower pace than in previous months.

The BRC attributed the drop in retail inflation to the slower rise in fresh food prices. In contrast, inflation for non-food items remained unchanged at 4.7%. The consortium's chief executive, Helen Dickinson, stated that this decrease in inflation was positive news for consumers. She noted that falling food inflation, particularly for products such as meat, potatoes, and cooking oils, contributed to this trend. However, Dickinson also mentioned that the government's recent increase in alcohol duties had prevented inflation from falling even further.

While some categories saw price rises ease, inflation for clothing and footwear increased as summer sales came to an end. Dickinson emphasized that retailers would continue their efforts to reduce inflation, but highlighted potential supply chain risks that could hinder their progress. These risks include Russia's withdrawal from the Black Sea Grain Initiative and its impact on Ukrainian grain facilities, as well as poor harvests across Europe and beyond. Additionally, the potential £400m increase in business rates bills from next April could pose a challenge to tackling inflation, unless the chancellor intervenes.