Food price inflation fell for the first time this year amid hopes that sterling may begin to stabilise in the coming months.

The annual food price inflation fell in April to 7.9 per cent from nine per cent in March, the first fall since December 2008. Fresh food fell to 8.9 per cent, down from 9.6 per cent in March.

On a month-on-month basis, the overall food index reported deflation of 0.3 per cent. The price of fresh food products decreased by 0.4 per cent compared with last month.

This slight decrease compared with the previous month may indicate the effect of sterling now stabilising, according to the British Retail Consortium (BRC).

With comparisons against the highs of last summer looming, it is widely expected that food inflation will continue to ease in the coming months. But there is the possibility that sterling will depreciate further, in which case food inflation is likely to have a second bout of inflationary pressure.

A recent DEFRA report estimated that total income in UK farming increased by 36.3 per cent in real terms in the year to February 2009.

In the medium term, the BRC expects that food inflation will continue to slow as sterling appears to have stablised, grocers renegotiate contracts and continued weakness in the economy spurs on competition in the grocery market.

Stephen Robertson, BRC director general, said: "There's some good news about prices in these figures. Heavy discounting left non-food goods nearly two per cent cheaper than a year ago and annual food inflation has slowed for the first time this year.

"With food cheaper than a month ago, the worst of food price inflation may be over, thanks to a more stable value for the pound, but rising farm-gate prices for meat and some vegetables are the main factors working against retailers' attempts to keep overall shopping bills down."

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