Shop price inflation has eased significantly, reaching its lowest point since October 2021.
- The BRC-NielsenIQ Shop Price Index showed a reduction to 0.2% in June, down from 0.6% in May.
- Non-food items continued in deflation, hitting -1% due to retailer strategies to boost sales.
- The Bank of England’s 2% inflation target has been achieved for the first time in nearly three years.
- Retail investments in operations and supply chains have been crucial in easing living costs.
The decline in shop price inflation to its lowest since October 2021 illustrates a notable change in the economic landscape. The BRC-NielsenIQ Shop Price Index recorded a decline in shop price inflation to 0.2% in June, a reduction from 0.6% in May, marking a significant easing over the past year. This decrease is well below the three-month average rate of 0.5%, underscoring the positive shift.
Non-food items have remained in deflation, dropping to -1% in June from -0.8% in the previous month. This reflects retailer strategies to revitalise sales through discounts, with a notable impact on electronics like televisions, which were priced competitively to leverage the excitement surrounding the Euros.
In a broader economic context, the Bank of England’s inflation target of 2% was met, a milestone not achieved in nearly three years. Helen Dickinson, CEO of the BRC, commented on this trend, highlighting the substantial investments made by retailers in enhancing operational efficiencies and supply chains during challenging times. She noted that “retailers invested heavily in improving their operations and supply chains to compensate for the impact of global shocks on input costs,” facilitating this reduction in shop prices.
Food inflation, now at its lowest since 2021, was aided by declining prices of essential commodities such as butter and coffee. Meanwhile, the deflation in non-food categories reflects efforts by retailers to stimulate consumer spending amid slowing price growth.
These adjustments in pricing have been beneficial for households, alleviating some cost of living pressures. Dickinson emphasised the need for continued government support to further reduce retailers’ cost burdens, suggesting that reforming the business rates system and apprenticeship levy could facilitate even lower prices in the future.
Retailers’ investments and strategic pricing have effectively reduced shop price inflation, easing household costs.
