Grocery Inflation In The UK Reached 12.7% In August
The latest data reveals that grocery inflation in the UK continues to ease and was seen at 12.7%. The recent reading coming out of the UK marks the 5th month in a row that inflation continues to slow down.
According to experts, the reason behind it is the wet weather (rain) in the UK, which is causing a slowdown in sales growth. In July, the grocery inflation's annual figure was 14.9% which further eased down to only 12.7% this month.
Downward Trend Of Grocery Inflation
If we look back all the way to 2008, then the month of August marks the 2nd month in which the grocery inflation fell sharply.
If we look at the prices in the UK on a YoY basis, the overall trend is still biased upwards. However, many staple goods have gone through price reductions, which will help UK consumers. For instance, the prices of sunflower oil and milk have fallen in the last few months, offering much-needed relief.
At the same time, the prices of many items have increased tremendously, such as frozen potato products, eggs, sugar items, and so on.
For now, the UK's government led by the conservative party is committed to reducing inflation by half this year. But looking at the persistently high food inflation in the country, the next year's election (2024) may become a challenge.
addition, the downward trajectory of grocery inflation is also closely watched by the BoE, consumers, and relevant lawmakers.
Just a few months ago, Tesco announced that the food inflation in the UK had reached a peak. Ever since then, the prices of many products have witnessed a decline.
Another factor that leads to the slowdown in grocery inflation is the claims that supermarket chains in the UK are profiting from the recent inflation crisis.
If we look at the overall inflation number in the UK, it was near 7.9% during June, which is still a high number when compared with other major economies. At the same time, food inflation in the UK is hovering at 17.3%, which is also high!
According to the BoE forecast, the food price inflation in the UK will go down to 10% sometime later in 2023.