UK shop price inflation remained stable in July after a period of decline amid fears that economic uncertainty could push prices up again.
According to the British Retail Consortium (BRC)-NielsenIQ Shop Price Index, annual inflation was 0.2%, just below the three-month average of 0.3% and marking the lowest rate since October 2021.
Food inflation continued to decline, falling to 2.3% from 2.5% in June, the lowest since December 2021. Fresh food prices rose 1.4% year-on-year, from 1.5% in June.
Non-food items continued to deflate, becoming 0.9 percent cheaper than a year ago, although this represents a slight slowdown from the 1 percent decline in June.
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Shoppers were able to score bargains on summer clothes and books as prices for those items fell for the seventh consecutive month due to weak demand.
However, the BRC warned that the impact of climate change on crops and increasing geopolitical tensions could push inflation up again.
Helen Dickinson, BRC chief executive, said: “Global food price declines in 2023 have further reduced food inflation rates in the first seven months of 2024. However, this trend is showing signs of reversing, which could potentially lead to rising food prices again in the future.”
“British households, which endured high inflation in 2022 and 2023, enjoyed lower inflation rates in the first half of this year. However, the uncertain outlook for commodity prices due to climate change and geopolitical issues suggests that renewed inflationary pressures could be imminent,” she added.
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Mike Watkins, head of retail and business analytics at NielsenIQ, said: “Given high year-on-year inflation rates, we can expect lower inflation rates in the coming months. But with household finances still tight, consumer confidence slowly rising and summer weather poor, retailers will need to keep price increases to a minimum to stimulate spending.”
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