Retail food price inflation is forecast to continue falling and will become flat by the end of the fourth quarter of 2009, according to English Farming & Food Partnerships (EFFP).

In the latest version of its Retail Food Price Forecast, compiled in partnership with the Cranfield School of Management, the farming body is also predicting modest growth in retail food price inflation throughout 2010 and into the first quarter of 2011.

However, it is predicted that the general level of retail food prices will not fall and, coupled with the slowdown in consumer expenditure, food affordability for the general population will decline.

In EFFP’s February forecast, the body thought food inflation would rise slightly during the fourth quarter of 2009, but now it is predicting that food inflation is likely to fall to zero in the fourth quarter of the year, before rising again as we move into 2010.

The downward trend in food inflation was briefly reversed in February when the annual rate rose from 9.9 per cent in January to 11.3 per cent. This was attributed to a blip caused primarily by a rise in seasonal fruit and vegetables in February, together with a persistently high rate of inflation for meat and sterling’s weakness over the past year.

EFFP expects the steady decline to continue over the next six months before a modest rise in 2010. The rate of food price inflation declined to 10.3 per cent in March, reinforcing the body’s prediction.

EFFP chief executive Siôn Roberts said: “The apparent resilience of farming and food at a time of unprecedented economic uncertainty is encouraging.

“However, the recession is far from over. Although the rate of economic decline has decelerated, the prospects of a return to growth in 2009 have been all but ruled out. The economy will recover, but it will be slow and difficult and food and farming businesses will need to invest in their supply chain in order to grow and develop. Investment for some will prove extremely difficult. However, for those that are able to invest, there is considerable opportunity to emerge from the downturn in a far stronger competitive position.”

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