Supermarket Food Prices Up By 3 Per Cent

Tue, 02 Feb 2010
 
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Food prices in UK supermarkets rose by nearly 3 per cent in January, according to new figures from the Grocer magazine.

The trade publication’s weekly price index shows that the average family spent an extra £6 on their basket of supermarket goods last month following a 2.8 per cent increase in grocery prices - the biggest monthly increase for two years.

The Grocer claims that the hike in food prices is the result of supermarket chains passing on January's VAT rise to the cost of food, despite most food being exempt from the tax .

"So much for falling food prices," the report said. "This month's Grocer price index figures put paid to any hopes that falling inflation would not be stalled by January's VAT hike."

"In theory the VAT shift should have had virtually no effect – most food is exempt from the 17.5 per cent tax – but as an investigation by the Grocer showed earlier in the month, retailers used the increase to pass on some price rises even on non-VATable items."

According to the UK grocery market data, there was also a sharp rise in year-on-year food inflation last month, from 1.6 per cent in December – the lowest value in two years – to 2.6 per cent.

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