Food prices fell for the fourth month in a row in November 2009 by 0.3 percent, led by a 2.0% fall in the price of fruit and vegetables. On the year, food prices have increased by only 0.9%, which is the lowest annual rise since 2005. The key food group enabling this is fruit and vegetables, where prices have fallen by 7.6% on the year. 

As shown in the graph the fall in prices has been rather dramatic over the last four months. However, food prices, apart from a spike in June 2009, have been relatively subdued since around September 2008. There are upside pressures on food price, particularly with commodity prices rising once again. However, we expect food prices to remain subdued over the medium term driven largely by producers having to compete for customers, who are a lot more price conscious now than they were a year or so ago.

On the month, three groups – fruit and vegetables, non-alcoholic beverages and grocery food, recorded lower prices. The most significant individual downward contributions came from lower prices for tomatoes (down 33%), broccoli (down 51.5%) and minced beef (down 8.7%). Pushing prices up in November were nectarines (up 100%), bacon (up 5.8%) and carrots (up 21.7%).

The 0.9% annual increase in food prices was the fourth month in a row where the annual increase has been lower than the month before. However, four of the five subgroups still recorded increases in prices over the year. The only subgroup to decrease was fruit and vegetables (down 7.6%).

Looking at individual items, the most significant downward contributions on the year came from lower prices for potatoes (down 31.9%), cheddar cheese (down 21.5%) and apples (down 22.9%).