Shop price inflation falls to lowest level of 2023

Shop price inflation fell to its lowest level of 2023 and, for the first time in two years, prices fell compared to the previous month.

According to the latest BRC-NielsenIQ Shop Price Index for July 2023, Annual Shop Price inflation decelerated to 7.6%, down from 8.4% in June. This is below the 3-month average rate of 8.4%. Shop price inflation is at its lowest level this year.

Non-Food inflation decelerated to 4.7% in July, down from 5.4% in June. This is below the 3-month average rate of 5.3%. This is the lowest level since December 2022.

Food inflation decelerated to 13.4% in July, down from 14.6% in June. This is below the 3-month average rate of 14.5% and is the third consecutive deceleration in the food category. This is the lowest level since December 2022.

Helen Dickinson, OBE, Chief Executive of the British Retail Consortium, said: “Leading the cuts was clothing and footwear, where retailers mitigated wet weather with larger discounts. Food price inflation also slowed to its lowest level this year, with falling prices across key staples such as oils, fats, fish, and breakfast cereals.

“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 spend 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.”

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