Latest data from the British Retail Consortium (BRC) shows shop price inflation has fallen to its lowest level since October 2021, partly due to retailers upping investment in their operations and supply chains in recent years.
The BRC-NIQ Shop Price Index shows annual inflation in the sector eased to 0.2% in June, down from 0.6% in May and below the three-month average rate of 0.5%.
Prices in non-food retailers remained in deflation, down 1.0% last month, compared to a fall of 0.8% in the preceding four weeks. This was driven by retailers trying to boost sales with discounting, which was particularly true for TVs ahead of the Euros.
Meanwhile, food inflation decelerated to 2.5% in June, down from 3.2% in May, and now stands at its lowest level since December 2021. This was helped by falling prices for everyday products such as butter and coffee.
Fresh Food inflation slowed to 1.5% (from 2.0%), and ambient food price rises decelerated to 3.9% (from 4.8%).
Helen Dickinson, Chief Executive of the BRC, commented: “During the height of the cost of living crisis, retailers invested heavily in improving their operations and supply chains to compensate for the impact of global shocks on input costs. This is clearly paying off, with shop prices having risen just 0.2% over the past 12 months.”
She added: “Whoever wins Thursday’s election will benefit from the work of retailers to cut their costs and prices, easing the cost of living for millions of households. The last few years should serve as a warning that where business costs rise significantly, consumer prices are forced up too.
“The next Government must address some of the major cost burdens weighing down the retail industry, including the broken business rates system, and inflexible apprenticeship levy. By doing so, retailers can invest in lower prices for the future – helping to reduce the cost of living pressures that many families face.”
NAM Implications:
- Whilst retailers invested heavily in improving their operations and supply chains has helped reduce inflation…
- …absorbing potential cost price increases has also helped.
- These costs will inevitably put extra pressure on retailer profit performance in end-of-year accounts…
- …meaning suppliers need to monitor their credit exposure more closely.
- See Cost of a customer going bust
