The price of the nation’s grocery basket is ticking up. Food prices are rising at the fastest rate in three years, according to newly released figures from the British Retail Consortium. Overall prices are up 1% over the year to March.

Goods for dishes such as a traditional English breakfast are noticeable among the rise, with prices for tea and butter on the increase.

The news marks the bucking of the retail trend in recent years. From around 2014 until recently food price rises have been negative, with drops in retail prices for food translating into a period of deflation. That itself was a sharp contrast with the years immediately after the banking crisis of 2008 when food prices were rapidly rising, reflecting the influence of external trends on the sector.

Recent trends reflect a mix of factors. Until the return of moderate food price inflation, prices had been driven down by a bout of competition in the industry. The arrival of low-priced discount retailers marked an evolution in the nature of the market and sparked fierce price competition as new entrants sought to capture customers and established players responded to protect their position. The return of food price increases suggests that this effect has now bottomed out.

Also contributing to the increase is the movement of the pound as the aftermath of Brexit continues to play out. As global markets price down the pound amid a degree of uncertainty about the post-Brexit landscape, the cost of imported food has risen as the currency exchange gap widens.

Still, while inflation has now technically returned to the food price sector, the increase of only 1% is considered impressive given currency movements, reflecting the level of competition that continues to exist between supermarkets.

Separately, research by Barclaycard shows new interest in consumer spending on food. Fully a fifth of shoppers have increased their expenditure on food. Researchers report that the primary motivation for the increase is a desire for greater health and well-being, highlighting a strong retail trend of recent years. Set alongside the recent supermarket price competition, the news contributes to a picture of a food retail sector in which multiple trends continue to operate. Industry leaders and analysts will be reading the emerging data this year to see whether the trend towards higher consumer spending on food persists at a time when higher import costs for many of those goods continues to reflect the weakened pound.

 

Taj food store, Brighton by Denna Jones licensed under Creative commons 4