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Shop price inflation in the UK decelerated in July hitting its lowest level this year as retailers mitigated the wet weather by offering larger discounts.
According to the latest British Retail Consortium-NielsenIQ tracker, annual shop price inflation cooled to 7.6% in July, down from 8.4% in June. This is below the three-month average rate of 8.4%, taking shop price inflation to its lowest level this year.
Helen Dickinson, chief executive of the BRC, said: ‘Shop price inflation fell to its lowest level of 2023 and, for the first time in two years, prices fell compared to the previous month.’
‘Leading the cuts was clothing and footwear, where retailers mitigated wet weather with larger discounts. Food price inflation also slowed to its lowest level this year, with falling prices across key staples such as oils, fats, fish, and breakfast cereals.’
Food inflation eased to 13.4% in July, down from 14.6% in June, the third consecutive deceleration in the food category and the lowest level since December. It was below the 3-month average rate of 14.5%.
Non-food inflation cooled to 4.7% in July, down from 5.4% in June, the lowest level since December 2022, and below the 3-month average rate of 5.3%.
Fresh food inflation slowed further in July, to 14.3%, down from 15.7% in June, the lowest level since November 2022.
Dickinson said the figures ‘give cause for optimism, but further supply chain issues may add to input costs for retailers in the months ahead.’
She highlighted Russia’s withdrawal from the Black Sea grain initiative and subsequent targeting of Ukrainian grain facilities, as well as rice export restrictions from India as dark clouds on the horizon.
‘We expect some global commodity prices to rise again as a result, and food prices will be slower to fall,’ she added.
Dickinson called on the UK government to play its part and freeze business rates from next April, or else risk adding a £400 million additional pressure on prices.
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