For the third consecutive month, prices across the big four are lower than they were a year ago - and the downward trend shows no sign of bottoming out.
Average annual inflation as measured by The Grocer Price Index (GPI) slipped into deflationary territory by 1 May, at -0.01%, and fell to -0.26% on 1 June. As of 1 July, it has fallen even further, dropping to -0.61% [The Grocer/Brandview.com]. The biggest monthly change was at Morrisons, where prices fell 2.30% month on month. The struggling Bradford-based supermarket cut 1,200 prices in May, kicking off its new ‘I’m Cheaper’ campaign, and over the past month it has improved its price competitiveness further with another 135 cuts across branded and own label products.
The step-change at Morrisons is also reflected in the results from the Grocer 33. Having picked up just one victory in the year to 14 June, Morrisons has already taken two wins in the first four weeks of the new Grocer 33 year.
Prices at Asda also fell significantly month on month, by 1.08%, as the Walmart-owned supermarket ramped up booze promotions in time for the World Cup. alcohol prices at Asda fell by 3.11% month on month, whereas cuts at the other supermarkets were all lower than 1%.
Asda increased the number of alcohol promotions month on month more than any other supermarket in June [Assosia].
As a result of the monthly change, annual inflation at Asda fell to -1.09%, lower than any of its rivals.
For the first time, all the supermarkets are now in deflationary territory. Tesco was exhibiting zero inflation on 1 June, whereas on 1 July it was at -0.25%. The swing at Waitrose is more marked, with inflation at 0.55% on 1 June and at -0.63% on 1 July. Waitrose slashed prices of meat, fish and poultry month on month and also cut prices significantly across frozen, dairy, household and soft drinks.
All the supermarkets cut fruit & veg prices month on month, helped by falling wholesale prices of key products such as potatoes and carrots. But with the price war focused on fresh produce, retail prices of fruit and veg have fallen 5.74% since the start of the year.
A sharp slowdown in meat, fish and poultry inflation has also depressed overall supermarket inflation. In the wake of the horsemeat scandal, meat, fish and poultry inflation rose to more than 7% in September last year, but has since fallen back to just 0.54%.
With summer and the World Cup in full flow, soft drinks prices have also fallen month on month, by 1.04%.
Wholesale prices: fruit & veg prices fall on forecasts of bumper harvests
Prices are down for most of the fruit and vegetables in our tracker. Potato prices are down the most year on year because of subdued demand and a much improved crop in 2013/14.
Stocks from last season are now running low, but planting for the new season is complete and some early varieties are ready for lifting. Weather conditions are currently ideal, and early forecasts indicate the UK could be in for another bumper crop. This has helped push down prices further month on month, by 3.2%.
Carrot prices also continue to fall following a good-quality winter crop, which is keeping well in storage and providing a steady stream of supply.
Meanwhile, apple prices are falling as good levels of production are expected in Europe. Harvesting has already started in some countries.
Tomato prices are up the most year on year, but even here prices are expected to fall soon, thanks to an increase in planting area this year.
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