UK shop price inflation drops to 10-month low

The British Retail Consortium (BRC) has released new data showing that the rate of inflation for shop prices in the UK decreased to its lowest point in the past 10 months during August.

The BRC-Nielsen Shop Price Index, which gauged the fluctuations in prices for 500 frequently purchased products from 1 to 7 August, dropped to 6.9% this month. This marks the lowest figure recorded since October 2022, representing a decrease from the 7.6% seen in July.

The announcement will be a source of relief for the Bank of England as officials persistently tackle soaring inflation by keeping interest rates high.

The reason for the decrease in the SPI during August was primarily due to the decline in food inflation. The rate of food price increase went down considerably, specifically for items like meat, potatoes, and certain cooking oils.

BRC's top executive, Helen Dickinson, mentioned that if the government hadn't raised alcohol taxes recently, the numbers would have been even lower. As for non-food items, prices for toiletries and cosmetics decreased due to the reduction in costs of various materials. On the other hand, inflation in clothing and footwear went up as retailers ended their extensive summer sales.

According to NielsenIQ's Mike Watkins, who leads the Retailer and Business Insight team, the volatile weather in recent weeks has also played a role: "Certain retailers on the high street have intensified their promotional efforts, and food retailers have carried on with reducing prices, as the inflationary burden from supply chains gradually reduces," he mentioned.