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The British Retail Consortium (BRC) has warned that falling inflation is likely to slow after Russia withdrew from the Black Sea Grain Initiative despite seeing annual shop price inflation drop to 7.6% in July.
This figure is down from 8.4% in June and represents the lowest inflation figure in 2023 so far.
Non-food inflation dropped to 4.7% in July, down from 5.4% in June, reaching its lowest level since December 2022 and below the three month average rate of 5.3%.
Food inflation fell to 13.4% in July compared with 14.6% in June again reaching its lowest level since December 2022.
This is below the three-month average rate of 14.5% and is the third consecutive decrease in the food category.
Fresh food inflation slowed further in July, to 14.3%, down from 15.7% in June, its lowest point since November 2022.
Lastly, ambient food inflation decelerated to 12.3% in July, down from 13% in June, and below the three month average rate of 12.8%.
Helen Dickinson, OBE, chief executive of the BRC, said: “These figures give cause for optimism, but further supply chain issues may add to input costs for retailers in the months ahead. Russia’s withdrawal from the Black Sea Grain Initiative and subsequent targeting of Ukrainian grain facilities, as well as rice export restrictions from India are dark clouds on the horizon.
“We expect some global commodity prices to rise again as a result, and food prices will be slower to fall. Retailers continue working hard to keep falling prices on track. Government must also play its part and freeze business rates from next April, or else risk adding a £400m additional pressure on prices.”
Mike Watkins, head of Retailer and Business Insight, NielsenIQ, said: “The summer holiday period should help discretionary spending a little and whilst inflation remains high, the outlook is improving. Shoppers continue to change how they shop as part of their coping strategies. This includes shopping at different retailers, buying lower priced items, delaying spend or only buying when there are promotions. This behaviour looks set to continue.”
