The latest BRC-NIQ Shop Price Index confirms that inflation in the retail sector is continuing to ease, with the overall figure falling to 2.5% in February, from 2.9% the month before.
The measure for food inflation decelerated to 5.0%, down from 6.1% in January, driven by lower energy and fertiliser costs, and intense price competition between the leading supermarkets. This marks the tenth consecutive deceleration in the food category, with inflation now at its lowest since May 2022.
Fresh food inflation slowed from 4.9% to 3.4%, while ambient food inflation decelerated from 7.7% to 7.2%.
However, non-food inflation was unchanged at 1.3% in February. Inflation for furniture, electricals, and health & beauty products rose, but the price of clothing fell as some retailers kept promotions in place to entice consumer spending.
“Easing supply chain pressures have begun to feed through to food prices, but significant uncertainties remain as geopolitical tensions rise,” said BRC Chief Executive, Helen Dickinson.
“Prices of non-food goods will be more susceptible to shipping costs, which have risen due to the re-routing of imports around the Cape of Good Hope. Domestically, retailers face a major rise to their business rates bills in April, determined by last September’s sky-high inflation rate. April’s rates rise should be based on April’s inflation, and the Chancellor should use the Spring Budget to make this correction, supporting business investment and helping to drive down prices for consumers.”
Mike Watkins, Head of Retailer and Business Insight at NIQ, added: “Shop price inflation has slowed and the underlying trend in prices will be downwards over the next few months. Since the start of the year, food retailers in particular have reduced prices as well as passing on price cuts coming through supply chains.
“For high street retailers faced with weaker demand, keeping prices stable over the next few months will be key to encourage customers to spend.”
NAM Implications:
- Meaning that food price inflation is still high, albeit growing at a slower rate.
- And no one forgets that significant uncertainties remain as geopolitical tensions rise.
