Shop price inflation slows in major boost for British households – 1 catch

Shop price inflation slowed in July in a boost for British households, but the industry has warned “growing pressures remain on the horizon”. The British Retail Consortium (BRC) works with data analytics partner NielsenIQ to track price changes for a range of products sold by UK retailers.

Based on these calculations, it publishes a monthly inflation rate compared to the month a year earlier to provide an indication of how prices are changing. According to the figures for July, shop prices are now 0.9% higher than a year ago, but down from the 1.2% year-on-year rate for June. Inflation on products other than food also dropped, from last month’s 0.6% to 0.2%. However, while food price inflation also decreased, to 2.2% from 2.4% in June, fresh food inflation was 3.1%, up from June’s 2.8%.

But shoppers benefited from deals on snacks and alcoholic drinks during the football FIFA World Cup.

Meanwhile, clothing and footwear retailers offered significant price cuts as they started clearing summer stock.

Some categories, including electricals and health and beauty, saw higher inflation as increasing chip prices and manufacturing costs fed through and were passed on to customers.

BRC chief executive Helen Dickinson told the Press Association: “Good news for households in July as shop price inflation slowed. Retailers competed hard to limit prices rises, with a wave of summer promotions across food and other goods.

However, she added that while “today’s figures are encouraging, growing cost pressures remain on the horizon”.

She said: “Higher employment costs and packaging taxes, global instability and climate-related disruption all make it more expensive to get products onto shelves.”

Mike Watkins, head of retailer and business insight at NIQ, told the news agency: “Shop price inflation remains lower than a year ago, which will help shoppers as they manage other increases in household spend, such as energy and fuel.

“So, we can expect promotions to continue to be an important part of driving demand for the rest of the summer.”