Shoppers hit with 7% food price rise

Jul 10 2008 by Peter McCusker, The Journal

CASH-STRAPPED consumers were hit with a 7% rise in food prices last month as shops increased the cost of goods by their highest rate for at least 18 months.

The British Retail Consortium (BRC) shop price index showed that price tags across the board rose by 2.5% year-on-year in June, pushed higher by the rocketing food costs.

Shoppers also faced the first increase in the cost of non-food goods since the survey began in December 2006, according to the BRC.

The results will make grim reading for Bank of England policymakers, who started their two-day meeting on interest rates yesterday.

The Bank’s Monetary Policy Committee is widely expected to leave rates on hold at 5% as mounting data signals no let up in inflationary pressures.

Yesterday’s BRC figures show that annual food price inflation has jumped from 4.7% in April, to 6% in May and 7% last month. Non-food costs rose 0.2%. The survey also showed that annual shop price inflation has increased five fold from 0.5% seen in June 2007.

Fresh food has seen the biggest price rises, at 8.4% in June, the BRC said, with veal, beef, pork and oils, margarine and cooking fats seeing the largest increases. So-called “ambient foods”, such as pasta, rice and flour have risen in price by 5.1% year-on-year in June.

However, the BRC argued that shops are still holding back from passing on far greater input costs to consumers.