Food price inflation in the UK is at its lowest ever recorded level, while overall price deflation occurred for an eleventh consecutive month in March.
The food market was the one that stood out though – as food inflation slowed to 0.8% in February, lower than at any other point in the past.
It represents good news for both retailers and consumers, as the BRC-Nielson Shop Price Index reported annual deflation of 1.7% in March.
Food and drink represents 15% of disposable income for the least affluent third of households, so the latest news could dramatically improve living standards.
Positive overall trends
Overall food inflation has averaged 2.1% across the last year, and 1.1% in the past three months, although that figure has fallen again to now represent the lowest figure since the introduction of the Monitor in December 2006.
Fresh food inflation also fell sharply in March from 1.5% to 0.6%, while issues relating to harvests in Brazil – the top coffee, sugar and orange juice producer – and West Africa’s cocoa plantations appear to be relatively isolated.
As a result, the market impact has been limited, resulting in the food inflation rate steadily decreasing.
The official inflation measure, the Consumer Price Index, rose by 1.7% in February. This figure was down from 1.9% in January – the lowest measure for more than four years.
What does this all mean for consumers?
Major grocery players have recently suggested that competition could intensify further in the months ahead; meaning shop price inflation is also expected to stay low.
Milk, cheese, eggs and meat all saw inflation at a decelerated rate in March, a major driver in the falling of rates throughout the period.
Earnings growth is forecast at 2.5% in 2014, while growth in real household disposable income per capita is also expected to turn positive, growing at 0.5% this year and 1.2% next year.
All of these factors suggest there will be less of a squeeze on real incomes, suggesting an increase in potential consumer spending power.
Staying watchful over finances
However, the need to carefully manage finances remains and for customers wishing to stick to a budget, a prepaid card is a viable solution.
Financial management is extremely important so the idea of keeping your spending in check with a prepaid card is a great way of ensuring you don’t spend more than you need to.
A prepaid card limits spending to the amount on the card at any given moment and is not directly linked to a bank account, ultimately making funds safer as a result.
The cards can easily be topped up or replaced if required, while accounts can be checked regularly online if necessary.