At last, good news for hard-pressed families as cost of shopping falls

THE price of food and drink at Britain's major supermarkets has fallen for the first time this year, an industry survey has shown.

A basket of staple products at two of the four main chains was cheaper last month compared with September. The overall cut of 0.1 per cent has been attributed largely to the heavy discounting of alcohol.

Asda scored the sharpest reduction, down 1.5 per cent, while Tesco's prices fell by 1 per cent. Morrisons was unchanged, but prices at Sainsbury's increased by an average of 2.5 per cent.

Asda was also found to be cheapest overall, with prices on average 3.5 per cent less than those of Tesco and Morrisons. The relief to many shoppers in the latest survey by the Grocer magazine follows prices rising every month so far this year.

By June, prices had risen by 12.6 per cent rise over the previous 12 months. However, overall prices remain 14 per cent higher than in March. Those of some basic foods has slumped this year, but many dairy products have shot up in price.

The wholesale price of milk powder has nearly halved, and palm oil, a key ingredient of many ready-meals, is down by almost a third. Oil and wheat prices are down 25 per cent and 29 per cent on a year ago, which has helped bring down delivery and processing costs. Bread prices have also fallen.

However, the rising cost of animal feed has pushed up the price of milk on the shelves by 14 per cent; all four supermarkets have added 9p to a four-pint bottle, to £1.53 last month. Butter has gone up by a fifth in the last year and Cheddar cheese by a third.

Andy Bond, Asda's chief executive, said: "As I predicted, food inflation has definitely peaked, and we're moving quickly to lower prices, driving down costs of the weekly shop and putting money back into customers' pockets. With Christmas just around the corner, it's never been more important."

The British Retail Consortium said the survey echoed its own findings that supermarkets had responded to the plight of consumers hit by economic downturn. It has reported that last month shop price inflation in Scotland fell for the first time this year, to 3.9 per cent.

Krishan Rama, its spokesman, said: "The supermarkets have realised shoppers are under pressure and have done all they can to minimise prices.

"Oil prices are down, which is feeding through to consumers. The supermarkets' high-profile promotions and price cuts are testament to how competitive the UK grocery market is."

The reductions follow cuts in fuel prices. Last week, Asda and Tesco slashed a further 2p off petrol prices, to bring unleaded down to 92.9p a litre. It also comes as homeowners with tracker mortgages benefit from interest rate cuts from major lenders, following the Bank of England's 1.5 per cent reduction in the base rate last week.

Healthy sign as sales of fresh salmon rise 22%

SALES of fresh salmon are leaping as healthy eating remains a priority for shoppers during the credit crunch.

A report by market researchers shows that an extra 40 million fresh salmon meals have been bought in the UK in the last two years.

Numbers have risen from 179 million in 2006 to 219 million in 2008 – an increase of 22 per cent.

The report says health remains a prime concern for salmon buyers in the UK.

Mark Thomson, from researchers TNS Worldpanel, said: "In the current economic climate, health is an even bigger influence on consumers. The popularity of fresh salmon continues to leap as its benefits are increasingly recognised.

"2008 has been a period of change for the grocery environment in Scotland and the rest of the UK. However, food and drink are still priorities for shoppers."

Scott Landsburgh, the chief executive of the Scottish Salmon Producers' Organisation , was delighted with the findings.

"It is extremely encouraging to see one in five UK households purchasing fresh salmon over the last year," he said.