Food prices set to rise further
The cost of food is rising at double the rate of the average income and prices are set to rise further, according to the British Retail Consortium.
Annual food price inflation in August was 3.1%, the same rate as the previous two months, but shoppers should expect to pay more for food in the coming months because of harvesting problems overseas.
"The price of products such as bread and pasta is already rising more quickly as increasing wheat costs from poor harvests in the USA filter through," says Stephen Robertson, director general at the British Retail Consortium.
"We are likely to see more of that effect not less in future months."
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An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).