UK Shop Price Inflation Remains Steady

UK shop price inflation held steady at 0.2% in July, the lowest rate since October 2021, according to the latest BRC-NielsenIQ Shop Price Index.

Why it matters: The stabilization of shop price inflation offers some relief to consumers amid ongoing economic challenges and may encourage increased discretionary spending in the coming months.

The details:

• Non-food categories experienced deflation, with prices falling by 0.9% in July.
• Food inflation slowed from 2.5% in June to 2.3% in July, below the three-month average rate of 2.7%.
• The current inflation rates mark a significant change from last year’s period of high-single-digit or low-double-digit figures.
• Declines in global food commodity prices in 2023 contributed to the reduction in food inflation rates over the first seven months of 2024.

What they’re saying:

• “In July, non-food price deflation continued, albeit at a slower rate than June. Holiday-makers could pick up bargain summer wear and books as clothing and footwear prices fell for the seventh consecutive month due to persistent weak demand,” said Helen Dickinson, chief executive of the British Retail Consortium.
• “As we compare figures to high inflation rates from a year ago, we can expect lower levels of inflation for several months to come. But with household finances still under pressure, consumer confidence improving slowly, and poor summer weather so far, retailers will need to keep price increases to a minimum to encourage spending,” added Mike Watkins, head of retailer and business insight at NielsenIQ.

The other side: Despite the positive trends, there are warnings that inflation may not be fully overcome, and retailers need to continue their efforts to manage it. Signs indicate that the trend of declining global food commodity prices may reverse, potentially renewing pressure on food prices in the future.

What’s next: Retailers will need to keep price increases to a minimum to encourage consumer spending, as household finances remain under pressure and consumer confidence improves slowly.

Full story

UK shop price inflation held steady at 0.2% in July, the lowest rate since October 2021, according to the latest BRC-NielsenIQ Shop Price Index. This marks a significant cooling compared to the surges experienced in recent years. Non-food categories saw deflation persist, with a July dip of 0.9%.

However, there are warnings that inflation may not be fully overcome and that retailers need to continue their efforts to manage it. Food inflation remains higher than non-food and continues to suppress consumers’ interest in discretionary spending. However, food inflation is slowing, moving from 2.5% in June to 2.3% in July, below the three-month average rate of 2.7%.

This trend may encourage consumers to feel more confident about discretionary spending in the upcoming months.

Shop prices steady amid economic challenges

Helen Dickinson, chief executive of the British Retail Consortium, said, “In July, non-food price deflation continued, albeit at a slower rate than June.

Holiday-makers could pick up bargain summer wear and books as clothing and footwear prices fell for the seventh consecutive month due to persistent weak demand.”

Dickinson also noted that the declines in global food commodity prices in 2023 contributed to the reduction in food inflation rates over the first seven months of 2024. However, she cautioned that there are signs this trend may reverse, indicating potential renewed pressure on food prices in the future. Mike Watkins, head of retailer and business insight at NielsenIQ, added, “As we compare figures to high inflation rates from a year ago, we can expect lower levels of inflation for several months to come.

But with household finances still under pressure, consumer confidence improving slowly, and poor summer weather so far, retailers will need to keep price increases to a minimum to encourage spending.”

The moderation in inflation is attributed to competitive pricing strategies among retailers and easing supply chain disruptions. However, analysts caution that cost pressures still persist in various sectors, and any future economic shocks could reignite inflationary trends. This situation underscores the ongoing challenges in balancing inflation control and consumer spending in the UK retail market.

The latest figures provide a snapshot of the current economic landscape, and while the steady rates bring some optimism, a vigilant approach remains necessary to address potential fluctuations and long-term economic stability.