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14 August 2014 | Will Green
Food price inflation for 2014 has been revised downwards to 2 per cent.
Prestige Purchasing has changed its original prediction of 3.8 per cent because of a combination of factors including a strong pound, better weather conditions leading to higher yields and more competition in the retail sector.
CEO David Read said: “We have watched with interest a steep decline in the rate of UK food inflation during 2014. This has been caused by a variety of positive factors including the strengthening of sterling, competitive pressure in the retail sector, and more benign climatic conditions leading to much higher yields in areas like cereals and oils.
“These factors have driven food inflation lower than our model predicted, and in the seven months between October last year and this May we saw food inflation fall from around 4 per cent to a position where prices actually fell year-on-year.”
However, the food and beverage purchasing organisation expects inflation to be higher next year and to rise further over the medium and long term.
“The macro factors of population growth and climate change, coupled with demand pressures from increasing GDP growth have led us to expect the rate of food inflation to start to increase again, and in June we have seen the first sign of this,” said Read. “The challenge now is to predict the speed and rate of this increase.”