Shop price inflation in the UK remained unchanged month on month at 0.2% in July, below the three-month average rate of 0.3% and at its lowest rate since October 2021, according to the British Retail Consortium.
Mike Watkins, head of retailer and business insight at NielsenIQ, said, “As we cycle through high inflation comparatives from a year ago we can expect a lower level of inflation for a number of months to come.
“But with the squeeze on household finances continuing, consumer confidence only slowly improving, and poor summer weather so far, retailers will still need to keep any price increases to a minimum to encourage shoppers to spend.”
Food Inflation
Food inflation slowed to 2.3% in July, down from 2.5% in June and below the three-month average rate of 2.7%.
Data showed that, on an annual basis, food inflation was at its lowest rate since November 2021.
Helen Dickinson, chief executive of the British Retail Consortium, stated, “The 2023 declines in global food commodity prices continued to feed through, helping bring down food inflation rates over the first seven months of 2024.
“However, this shows signs of reversing, suggesting renewed pressure on food prices in the future. Sports gatherings for Wimbledon and the Euros benefitted from discounted snacking items such as crisps and soft drinks.”
Fresh food inflation slowed to 1.4% during the month, down from 1.5% in the previous month.
Inflation in this category was below the three-month average rate of 1.6% and the lowest since November 2021.
Elsewhere, ambient food inflation decelerated to 3.6% in July, from 3.9% in the previous month.
It fell below the three-month average rate of 4.1% and reached its lowest rate since April 2022.
'Renewed Inflationary Pressures'
Dickinson added, “UK households suffered from high levels of inflation in 2022 and 2023 and can celebrate inflation levels returning to normal over the first half of this year.
“But, with the outlook for commodity prices remaining uncertain due to the impact of climate change on harvests domestically and globally, as well as rising geopolitical tensions, renewed inflationary pressures could be lurking just over the horizon.”
The non-food category remained in deflation at -0.9% in July, up from -1.0% in the preceding month, the BRC noted. This data aligns with the three-month average deflation of -0.9%.
Dickinson said, “Non-food price deflation continued, albeit at a slower rate than June. Holidaymakers could pick up bargain summer wear and summer reads as clothing and footwear prices fell for the seventh consecutive month amidst persistent weak demand, and the prices of books fell.”
