Down down down... inflation has slowed by more than half compared to last year and fruit and veg prices plummeted 7.9% in July. James Ball reports


Food inflation crashed to a halt in July. After months of fluctuating prices, caused by the fall of sterling and supply shortages, deflation has finally hit supermarket shelves.

July's Grocer Price Index reveals a solid if unspectacular 1.4% fall in prices since June. However, the real drama was to be found in the annual inflation figures. In June, food inflation stood at 10.9%. In July, it fell by more than half to just 4.8% the lowest level since April 2008.

July 2008 was the month food price inflation really hit shelves as prices soared almost 5% in the space of weeks, in response to rocketing commodity prices.

As price changes this July did not match last year's spikes, inflation was always going to drop back somewhat. But that wasn't the full story: prices in key categories dropped sharply.

Prices in the ambient grocery category fell 1.3% month-on-month, and frozen food was 2.2% cheaper in July than in June.

Fruit and vegetables were the real star of the show for consumers, though. Fresh produce was a massive 7.9% cheaper in July than the month before, notching prices slightly below where they were at this time last year.

Ideal weather earlier in the year meant many early harvests were good, while several key British summer fruits came into season, leading to reduced prices as retailers cut back on pricier imports. The sunny June weather also helped, encouraging retailers to promote fruit and vegetables hard driving prices down.

However, there are clouds on the horizon. With the Met Office now forecasting a July washout, promotions are likely to dry up and forthcoming harvests including wheat may be damaged if conditions turn out to be poor.

More broadly, the outlook is sunnier. Eight of the 12 categories tracked in The Grocer Price Index fell in price in July, and three fruit and veg, household and bakery were cheaper year-on-year.

The category with the highest inflation in July was biscuits, confectionery and snacks, where prices were up 3.4% month-on-month. This increase was driven by a shift in promotional tactics for the summer period, which traditionally sees fewer deals on snacks.

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