British Retail Consortium reports inflation in retail prices at their lowest since the year 2021.
UK Retail Price Inflation Tumbles to Three-Year Low in July
In a significant development for the British economy, retail price inflation has fallen to its lowest level in almost three years, according to the latest figures from the British Retail Consortium (BRC).
The BRC's data, collected between 1 and 7 June 2024, showed annual inflation rates had tumbled significantly across food and non-food categories. The annual deceleration of food prices was led by fresh food, particularly butter, with chiller aisles seeing inflation tumble from 2% in May to 1.5% last month. Food price hikes fell from 3.2% year-on-year in May to 2.5% in June, and even dropped 0.1% on a monthly basis.
This marks a substantial improvement from the previous month, as ambient foods, such as cereals, confectionary, and tinned goods, saw prices go up by an average of 3.9% in June compared to the same month last year. However, the cost of non-food items saw deflation, with prices being an average of 1% down year-on-year. This came after prices fell 0.2% month-on-month.
The annual rate of retail price inflation decreased from 0.6% in May 2023 to 0.2% in July 2023. This is the lowest rate since October 2021. The BRC stated that the improving inflation figures had come as a result of significant investment by its members.
Helen Dickinson, the chief executive of the BRC, called on the winner of the next general election to better support her members by addressing major cost burdens weighing down the retail industry, including the broken business rates system and inflexible apprenticeship levy.
Mike Watkins, head of retailer and business insight at NielsenIQ, said slowing inflation would aid shoppers, as they would be better able to plan their household budgets. He also noted that falling coffee prices were one of the key reasons for the slowdown in food price hikes.
TVs were subject to some of the biggest discounting, the BRC said, as retailers sought to take advantage of the Euro 2024 football championship in Germany.
It is worth noting that the Bank of England's target for inflation is close to 2%, and the base rate was held at 5.25% at the June Monetary Policy Committee meeting. Official Office for National Statistics (ONS) data for inflation is due out in a fortnight, which will provide a more comprehensive picture of the current state of the UK's economy.
However, it is important to mention that there is no information available about the winner of the next British parliamentary election held on Thursday, June 13, 2024, nor about their statements regarding retail price inflation before being elected.
Sticky services and core inflation within the CPI data could delay interest rate cuts until the autumn, as these components of the CPI are not affected by retail price changes as much as food and non-food items.
Despite the positive news about retail price inflation, food prices continue to rise at a higher rate than headline inflation. This means that the cost of living remains a significant concern for many households in the UK.
In conclusion, the UK's retail price inflation has significantly decreased, reaching a three-year low in July 2023. This is good news for consumers, who will be able to plan their household budgets more easily. However, it is important to keep in mind that there are still challenges ahead, particularly in the area of food prices.
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