Olive oil is cheaper than it's been since February 2024. Is it a sign of falling prices to come?

Olive oil, flour and clothing are among the items cheaper than they were a year ago, contributing to a greater-than-expected fall in the UK’s headline rate of inflation. Is it the sign of something to come?

The price of olive oil fell by 16% from November 2024 to November 2025, while flour fell 6%, pasta and sugar became 4% cheaper and clothing fell 0.25%, according to newly-released figures from the Office for National Statistics (ONS).

Yet prices remain far higher than this time four years ago, with olive oil costing twice as much as in November 2021, and sugar costing two-thirds more.

Overall, year-on-year inflation has fallen to its lowest level since March, reaching 3.2%. But falling inflation does not necessarily mean prices are going down – it simply means the cost of the ‘basket of goods’ used by the ONS has stopped rising so quickly.

Sarah Johnson, founder and director of Flourish Retail, said falling prices may be down to lower costs of produce, or because supermarkets are competing with each other on price.

“Supermarkets are quite focused on price at the moment because a lot of them are trying to get market share. Think of Asda doing their Rollback again. They know that’s where customers are feeling the squeeze, and that’s the one thing they can really target to get people in through the door,” said Johnson.

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The fall in the main rate of inflation has dominated headlines, but it is often the more hidden numbers which dictate the reality of life for poorer households. As the cost of living crisis saw inflation soar to 10%, studies showed the effective rate of inflation for the poorest households was about 2% higher than for the richest.

Other food prices have risen in the past year, with beef up by more than a quarter and chocolate up almost a fifth.

The price of biscuits and cakes has fallen 3.45% in a single month, but remains higher than a year ago.

Olive oil is at its cheapest since February 2024, while sugar is cheaper than it has been at any point since September 2024.

Somebody with the same per-item budget as in November 2021 would only be able to afford half as much olive oil now, three-quarters as much flour and pasta, and three-fifths as much sugar.

Johnson said while supermarket competition may push prices lower in the new year, customers are unlikely to see prices going back to what they were. Even if the costs of stock itself goes down, factors like increased minimum wage, higher national insurance contributions, and the willingness of customers to pay elevated prices would act as a barrier.

“Even if everything went back to exactly the same price in terms of commodities tomorrow, you’d probably still have to pay a higher price just to absorb some of that,” Johnson said.

James Walton, chief economist at the IGD (Institute for Grocery Distribution) says that inflation for food and drink seems to be slowing – for the moment.

“Food retail is very competitive and we have seen modest price cuts in the last weeks of 2025, especially for cereal-based items,” he said. “However, although prices for some things have fallen a little, we do not expect a broad reduction in the price of food and drink any time soon. Business costs are very high and the food system is under pressure, in the UK and globally. Any new cost for businesses such as pay rises for workers will need to be passed on to shoppers and any ‘shock’ – like a drought – could mean fresh pulses of inflation.”

Away from prices, unemployment has been on the rise. The UK’s unemployment in the three months to October was 5.1%, up from 4.3% in the same period of 2024 and the highest rate since the pandemic.

Amid this, young people have been hit hard has been an 85,000 increase in the number of 18-24-year-olds out of work.

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