Shop price inflation has hit the brakes in July, maintaining its position after a period of deceleration, amidst caution over future economic turbulence.
The overall annual inflation rate has steadfastly held at 0.2 percent, sitting beneath the three-month average of 0.3 percent and marking the lowest point since October 2021, as per the data from the British Retail Consortium (BRC)-NielsenIQ Shop Price Index.
Food inflation has taken a dip from June’s 2.5 percent to 2.3 percent, reaching its most modest level since December 2021, while fresh food prices have seen a slight decrease to 1.4 percent above last year’s figures, down from the 1.5 percent increase observed in June.
Non-food items continue to see deflation, now being 0.9 percent less expensive than they were a year prior, albeit this reduction has decelerated from the one percent reported in June.
Bargain hunters and holidaymakers are in luck as prices for clothing and footwear have dropped for the seventh month in a row due to sustained low demand, and book prices have also decreased.
Yet, the BRC has issued a warning that climate change effects on crop yields, coupled with escalating geopolitical tensions, could trigger a resurgence in inflationary pressures.
BRC’s chief executive Helen Dickinson commented: “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.”
“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.”
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.”
