Inflation steady but uncertainty ahead: BRC

Shop Price annual inflation in July remained unchanged though experts have forecasted renewed pressure on food prices in the future.

According to the latest report by British Retail Consortium (BRC), Shop Price annual inflation remained unchanged at 0.2 per cent in July. Food inflation slowed to 2.3 per cent in July, down from 2.5 per cent in June. This is below the 3-month average rate of 2.7 per cent. The annual rate continues to ease in this category and inflation is at its lowest rate since December 2021.

Fresh Food inflation slowed further in July, to 1.4 per cent, down from 1.5 per cent in June. This is below the 3-month average rate of 1.6 per cent. Inflation is its lowest rate since November 2021. Ambient Food inflation decelerated to 3.6 per cent in July, down from 3.9 per cent in June. This is below the 3-month average rate of 4.1 per cent and is the lowest rate since April 2022.

Helen Dickinson, Chief Executive of the British Retail Consortium, said, “Shop Price Inflation in July remained unchanged on the previous month. Non-food price deflation continued, albeit at a slower rate than June. Holiday makers could pick up bargain summer wear and summer reads as clothing and footwear prices fell for the seventh consecutive month amidst persistent weak demand, and the prices of books fell.

"The 2023 declines in global food commodity prices continued to feed through, helping bring down food inflation rates over the first seven months of 2024. However this shows signs of reversing, suggesting renewed pressure on food prices in the future. Sports gatherings for Wimbledon and the Euros benefitted from discounted snacking items such as crisps and soft drinks.

“UK households suffered from high levels of inflation in 2022 and 2023 and can celebrate inflation levels returning to normal over the first half of this year. But, with the outlook for commodity prices remaining uncertain due to the impact of climate change on harvests domestically and globally, as well as rising geopolitical tensions, renewed inflationary pressures could be lurking just over the horizon.”

Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, said, “As we cycle through high inflation comparatives from a year ago we can expect a lower level of inflation for a number of months to come. But with the squeeze on household finances continuing, consumer confidence only slowly improving, and poor summer weather so far, retailers will still need to keep any price increases to a minimum to encourage shoppers to spend.”