September 4, 2008 | posted by Michael Baxter in inflation |

Could that nasty period of food inflation be nearing its end? The latest data from the British Retail Consortium (BRC) out yesterday suggests it may.

According to the BRC, food prices rose by 0.3 per cent on last month. Okay, that’s about 0.3 per cent too high, but then again, in July food prices shot up by 1.9 per cent on the month before.

Now one month’s worth of data does not make a trend, and indeed the monthly figures were even lower than that on one occasion this year – in March, when food inflation was zero. But it is an encouraging sign, nevertheless.

Non-food, inflation, however, picked up in the month – rising to 0.6 per cent in July, after July saw non-food prices drop by 0.8 per cent.

The annual figures are not so encouraging – in fact, food inflation hit 10 per cent year on year in August. The highest level recorded so far during this cycle.

With food prices rising by around three times the rate of wage increases – it is no wonder we are feeling the pinch. But it is the month on month figures that give us the real clue about the future. So it will be interesting to see how this index develops over the next few months.

And that brings us to a first prediction on when the UK economic recovery can begin – to find out more, read the next article.