New data from the British Retail Consortium (BRC) and NielsenIQ has shown that the rate of price increases in UK shops has returned to “normal levels”. According to the report, overall annual shop price inflation decreased to 0.6% in May, down from 0.8% in April, marking the lowest figure since November 2021.
The BRC and NielsenIQ noted that non-food products remained in deflation in May, at -0.8%, a decrease from -0.6% in the previous month. Researchers attribute this to shops cutting prices in an effort to stimulate demand for big-ticket items like furniture and TVs ahead of Euro 2024.
While food prices continued to rise, the rate of inflation slowed slightly from 3.4% in April to 3.2% in May. The report also highlighted that the cost of ambient foods, such as biscuits, has remained high due to an increase in global sugar prices.
These findings come after the Office for National Statistics (ONS) released data last week showing a sharp decline in retail sales in April. The ONS reported a 2.3% decrease in the number of goods and services purchased by households, with above-average rainfall being cited as a contributing factor.
Helen Dickinson, chief executive of the BRC, emphasized the need for government support to keep inflation low, stating, “With an election in a matter of weeks, it is vital that parties detail their support for customers and retailers in their upcoming manifestos.”
In regards to the current state of the industry, Mike Watkins from NielsenIQ said, “After a number of months of falling input prices, we are now seeing food inflation stabilize and retailers continue to pass on price cuts to shoppers.” He also noted that while inflationary pressure has eased and there is some improvement in shopper sentiment, the unseasonable weather has dampened retail sales, leading to lower prices and increased promotional activity to drive demand.
Last week, official figures revealed that the overall rate of inflation decreased to 2.3% in April, its lowest level in almost three years. This suggests that the efforts of retailers in cutting prices and passing on discounts to customers may be having a positive impact on overall inflation levels.
