Shop price inflation in the UK has eased to its lowest rate in almost two years as retailers offered heavily discounted goods in their January sales to entice consumers to spend amidst weak demand.
According to the analysis by the British Retail Consortium (BRC) and NIQ, annual shop price inflation slowed to 2.9% in January, down from 4.3% in December. It is the seventh consecutive monthly decline and the lowest rate recording since May 2022.
Non-food prices were the primary driver of the decline, with the rate easing to 1.3%, down from 3.1% the month before.
Meanwhile, food inflation came in at 6.1% in January, down from 6.7% in December. Fresh food price rises eased from 5.4% to 4.9%, while ambient fell from 8.4% to 7.7%.
However, the BRC warned that price rises could start accelerating again. Its Chief Executive, Helen Dickinson, said progress in slowing inflation was likely to be hampered by other cost pressures, including implementing the rise in the National Living Wage and an increase in business rates in April.
She added: “Rising geopolitical tensions will also add to uncertainty and costs in supply chains. With a general election later this year, we want to see political parties outline how they will help unlock investment across the country, rather than the current trajectory, which is doing just the opposite.”
NAM Implications:
- As reported, ‘Non-food prices were the primary driver of the decline’…
- …given that retailers eased up on promoting food in January.
- But implementing the rise in the National Living Wage and an increase in business rates in April…
- …are additional cost burdens that have yet to emerge from the pipeline.
- i.e. it’s not over yet (or anything like it!)
