Shop price inflation remains unchanged in July

Shop Price annual inflation remained unchanged at 0.2% in July but economic uncertainty could lead to future rises, the British Retail Consortium (BRC) has warned.

The BRC-NielsonIQ Shop Price found Non-Food items remained in deflation at -0.9% in July, up from -1.0% in the preceding month. This is in line with the three-month average rate of -0.9%. Inflation is at its lowest rate since October 2021.

Additionally, Food inflation slowed to 2.3% in July, down from 2.5% in June, again below the three-month average rate of 2.7%. The annual rate continues to ease in this category and inflation is at its lowest rate since December 2021.

Fresh Food inflation also slowed further in July, to 1.4%, down from 1.5% in June and Ambient Food inflation decelerated to 3.6% in July, down from 3.9% in June. This is below the 3-month average rate of 4.1% and is the lowest rate since April 2022.

Despite inflation remaining unchanged the BRC warned that the 2023 declines in global food commodity price are “showing signs of reversing”.

Helen Dickinson, chief executive of the BRC, said: “Shop Price Inflation in July remained unchanged on the previous month. Non-food price deflation continued, albeit at a slower rate than June. Holiday makers could pick up bargain summer wear and summer reads as clothing and footwear prices fell for the seventh consecutive month amidst persistent weak demand, and the prices of books fell.

“The 2023 declines in global food commodity prices continued to feed through, helping bring down food inflation rates over the first seven months of 2024. However this shows signs of reversing, suggesting renewed pressure on food prices in the future. Sports gatherings for Wimbledon and the Euros benefitted from discounted snacking items such as crisps and soft drinks.”

She added: “UK households suffered from high levels of inflation in 2022 and 2023 and can celebrate inflation levels returning to normal over the first half of this year. But, with the outlook for commodity prices remaining uncertain due to the impact of climate change on harvests domestically and globally, as well as rising geopolitical tensions, renewed inflationary pressures could be lurking just over the horizon.”

Mike Watkins, head of Retailer and Business Insight, NielsenIQ, said: “As we cycle through high inflation comparatives from a year ago we can expect a lower level of inflation for a number of months to come. But with the squeeze on household finances continuing, consumer confidence only slowly improving, and poor summer weather so far, retailers will still need to keep any price increases to a minimum to encourage shoppers to spend.”