According to new data from the British Retail Consortium (BRC), shop price inflation fell to its lowest level since October 2021, falling to 0.2% in June from 0.6% in the previous month. The June figure is also below the three-month average of 0.5%.
This was the fourteenth consecutive month of decline in food price inflation, falling to 2.5 percent from 3.2 percent in May.
The main reason for this decline was falling prices for products such as butter and coffee, the BRC said.
Non-food prices fell 1%, compared with -0.8% in May. This was below the three-month average slowdown of -0.8%.
The decline in non-food sales was caused by retailers trying to boost sales through discounts. “This was particularly true for TVs, which tried to capitalise on Euro fever with great deals,” said Helen Dickenson, BRC’s chief executive.
Read more: Despite high mortgage rates, UK property prices rise in June
“Whoever wins Thursday’s election will benefit from the work of retailers cutting their costs and prices, thereby reducing the cost of living for millions of households,” she added.
“The last few years should serve as a warning to us: when corporate costs rise significantly, consumer prices also rise.”
The data will be welcome news for the Bank of England, which is set to cut interest rates over the summer. There is no central bank meeting on interest rates in July, so a cut is now expected in August. Rates have been held at 5.25%, a 16-year high, even though inflation has fallen back to the bank’s 2% target.
This will also be a good starting point for the next government when voters go to the polls on Thursday.
“The next government must address some of the biggest cost burdens affecting retail, including the broken business rates system and the inflexible apprenticeship levy,” Dickenson said.
“This will allow retailers to invest in lower prices for the future, helping to ease the cost of living pressures faced by many families.”
Watch: How much money do I need to buy a house?
Download the Yahoo Finance app, available for Apple And Android.
