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UK shop price inflation decelerated further in August, data showed on Tuesday, presenting some ‘better news for consumers’.
According to the latest British Retail Consortium-NielsenIQ tracker, the annual shop price inflation rate cooled to 6.9% in August from 8.4% in July. This was below the three-month average of 8.0% and the lowest rate since October 2022.
Food inflation slowed to 11.5% in August from 13.4% in July, while non-food inflation remained at 4.7%.
On a monthly basis, shop prices rose 0.5% in August, following a 0.1% decline in July.
‘Better news for consumers as shop price inflation in August eased to its lowest level since October 2022. This was driven by falling food inflation, particularly for products such as meat, potatoes and some cooking oils. These figures would have been lower still had the [UK] government not increased alcohol duties earlier this month,’ said BRC Chief Executive Helen Dickinson.
‘While inflation is on course to continue to fall thanks to retailers’ efforts, there are supply chain risks for retailers to navigate. Russia’s withdrawal from the Black Sea grain initiative and its targeting of Ukrainian grain facilities, as well as poor harvests across Europe and beyond, could serve as potential roadblocks to lower inflation. A potential £400 million hike to business rates bills from next April would certainly jeopardise efforts to tackle inflation unless the chancellor intervenes,’ Dickinson added.
NielsenIQ Head of Retailer & Business Insight Mike Watkins said poor weather may have played a part in August’s figures.
Watkins explained: ‘The unpredictable weather of recent weeks has dampened consumer demand with some high street retailers increasing promotional activity and food retailers continuing to extend price cuts, as the inflationary pressure coming from supply chains continues to lessen. Looking ahead, a NIQ survey shows that 60% of households expect to be severely or moderately impacted by rising household costs in the coming months so once back from summer holidays, we expect consumers to remain cautious about discretionary spend even as inflation decelerates.
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