New data from the Office of National Statistics (ONS) shows that UK food and drink prices were 19.0% higher year-on-year in April 2023.
At the end of 2023, it predicted inflation would likely remain above zero, with the possibility of price reductions beyond that point based on market conditions.
'Running Out Of Momentum'
“IGD’s latest forecasts, along with today’s new figures, suggest that inflation may have peaked," said James Walton, chief economist at IGD. "This is partly because the powerful forces which drove those price increases are running out of momentum, with prices for energy, fertiliser and some basic food commodities falling.
“Despite this, due to a number of factors such as long and complex supply chains and ongoing contractual arrangements, there are still further cost increases to work through the system. This means we will continue to live with inflation for several months – which doesn’t offer much relief for hard-pressed shoppers."
“However, food retail is highly competitive and businesses have a strong incentive to pass on the benefit of lower costs to shoppers promptly. This process has already begun – in April and May, several supermarkets delivered price cuts for milk, bread and butter," said Walton.
“There are many variables in play, with weather and crop yields always hard to predict, but – barring major new shocks – IGD believes that food price inflation will gradually begin to slow as 2023 progresses.”