UK shop price inflation eased sharply in January to its lowest rate in almost two years as retailers heavily discounted goods during a weak sales period, shows industry data published today (30).
According to British Retail Consortium (BRC), annual shop price inflation slowed to 2.9 per cent in January, down from 4.3 per cent in December. It is the seventh consecutive monthly decline and the lowest rate since May 2022.
Food inflation also slowed, to 6.1 per cent in January from December's 6.7 per cent, representing the ninth consecutive fall and the lowest rate since June 2022. Fresh food inflation decelerated even more, dropping to 4.9 per cent in January, compared to 5.4 per cent the previous month.
The inflation rate for non-food products dropped to 1.3 per cent in January, a decline from the 3.1 per cent recorded in December. This marked the lowest rate since February 2022.
The BRC said the easing is "good news for the morning brew" as the price of tea and milk fell. However, the cost of alcohol remained higher due to increased duties.
"Some new year cheer as January shop price inflation slid to its lowest level since May 2022," said BRC CEO Helen Dickinson.
"Non-food goods drove the fall, as many retailers offered heavily discounted goods in their January sales to entice consumer spend amidst weak demand. Rising geopolitical tensions will also add to uncertainty and costs in supply chains."
Despite the sharp fallback in price growth, the BRC warned about risks to the outlook, such as new cost pressures from higher business rates and the increase in the national living wage from April and from unrest in the Red Sea. “Rising geopolitical tensions will also add to uncertainty and costs in supply chains,” said Dickinson.
Mike Watkins, head of retailer and business insight at NielsenIQ, added, "Shoppers are seeing savings at the checkout, with non-food retailers on promotion and food retailers continuing to reduce prices when the costs of goods fall.
"However, consumer demand remains fragile as most households are yet to feel better off after nearly two years of inflation."
