Britain’s incoming government stands to gain from a reduction in household financial pressure due to slowing shop inflation and falling fuel prices.
Annual UK shop price inflation cooled to 0.2% last month, down from 0.6% in May, the British Retail Consortium (BRC) reported. This marks the slowest inflation rate since October 2021, driven by retailer price reductions on key products such as butter and coffee. Separate data from the RAC indicates that petrol and diesel prices declined for the second consecutive month in June, offering some respite to families struggling with the cost of living crisis.
Despite this reduction, the RAC pointed out that fuel prices remain “too expensive” in England, Wales, and Scotland. The average petrol price in the UK at the end of June was just under 145p per litre, a slight decrease from 148p at the start of the month. Diesel prices also saw a modest decline, from nearly 154p to about 150p per litre. Notably, Northern Ireland experienced lower prices, with petrol averaging 4.5p less per litre and diesel 8p less than in the rest of the UK.
Simon Williams, head of policy at the RAC, commented: “While it’s good news prices at the pumps have fallen for the second month in a row, this also leaves a bad taste in the mouth because we know drivers in Great Britain are continuing to get a raw deal as both petrol and diesel are still much more expensive than in Northern Ireland.” He further highlighted forecourts owned by major retailers such as Shell and BP as among the most expensive, as per Competition and Markets Authority data.
Rishi Sunak has underscored lower inflation as a critical component of the Conservatives’ general election strategy. He emphasised the official headline rate’s drop back to the Bank of England’s 2% target in May, down from a peak of 11.1% in October 2022. However, Shadow Chancellor Rachel Reeves pointed out that household finances remain under substantial pressure, with average prices significantly higher than prior to the cost of living crisis.
The latest BRC data reveals that food inflation slowed to 2.5% in June, down from 3.2% in May, marking the 14th consecutive month of slowing annual grocery price growth. Despite this trend, average prices in UK shops continue to rise, albeit more slowly. BRC Chief Executive Helen Dickinson noted that retailers have implemented price cuts on essential goods, including butter and coffee. Non-food items are also seeing deflation as shops offer discounts to boost sales, particularly on televisions amidst the Euros fervour.
Dickinson remarked, “Whoever wins Thursday’s election will benefit from the work of retailers to cut their costs and prices, easing the cost of living for millions of households.”
The next UK government will likely experience reduced economic pressure on households due to easing inflation and declining fuel costs. Although the overall cost of living remains a concern, strategic price reductions and market dynamics present a more favourable economic landscape.
