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Food inflation may be slowing down but can we expect food prices to fall?

Food inflation may be slowing down, but this doesn't mean consumers will see prices drop significantly any time soon.

According to the British Retail Consortium (BRC), food inflation fell to 14.6% in June - a drop from 15.4% in May and below the three-month average of 15.2%.


But while there is some optimism that we could be past the peak of food price rises, business insiders are warning food price inflation must fall substantially to help curb overall inflation.


Why have food prices risen?


One factor behind the dramatic increase is poor harvests in Europe and North Africa, which have led to the wholesale prices of ingredients like wheat and barley sky-rocketing.


The shortage of supply from global providers forced some supermarkets to ration sales of salad items including lettuce, tomatoes and cucumbers earlier this year.


Russia's invasion of Ukraine has been another key driver of grocery prices, making imports of ingredients like grain and sunflower oil considerably more expensive.


Rising fuel prices have also played a significant role, making imports more costly and forcing supermarkets to pass on the costs to consumers.


When can we expect food prices to come down?


The BRC says "if the current situation continues, food inflation should drop to single digits later this year", suggesting we could be over the worst of the price rises.


However, the consumer intelligence company NielsenIQ is warning households will still feel the need to limit spending for the rest of the year in a bid to save money, while a slow down in food inflation doesn't mean food prices will fall.


They will continue to rise, just not as quickly, and supermarket bosses are coming under increasing pressure to relieve customers with extra support.


When grilled by MPs on Tuesday, four supermarket bosses denied they are profiteering from the cost of living crisis, insisting they are "the most competitive" they have ever been.


The cost of some supermarket staples has reduced, however the price of items such as eggs and milk still remain high when compared to pre-pandemic levels.


The Office for National Statistics (ONS) states 400g of cheddar cheese is currently £3.86, a 50% increase on May 2022, and two pints of milk, now £1.29, costs 28% more than it did a year ago.


According to latest projections by Goldman Sachs, food bills in a year's time could still be higher than they are now, with a weekly bill of £80 forecast to be £5 more expensive.


While food inflation may fall to 6.4% in 12 months, families will still be facing increased costs.


Brexit could still push food prices up even more


The UK's post-Brexit border strategy risks further pushing up food prices, according to representatives from Britain's fresh produce industry.


In a letter to the government, the Fresh Produce Consortium (FRC) has warned that traders in the food supply chain will not be able to absorb the extra cost of charges for import checks, due to be introduced next year.


These charges will have to be passed onto consumers, says the FRC, which threatens to fuel food inflation even more.


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