Shop price inflation has eased to the lowest level since November 2021 after retailers cut the price of big purchases such as furniture and TVs as households keep a tight rein on spending amid cost of living pressures and poor weather.
Prices rose at an annual rate of 0.6% in May, down from 0.8% in April – the slowest pace since November 2021 – according to the latest monitor from the British Retail Consortium (BRC) trade body and the market research firm NielsenIQ.
The decrease was led by non-food prices, which fell by an annual rate of 0.8% in May, the second consecutive month of deflation, marking the biggest drop at the shelf-edge since 2021.
Food prices rose by 3.2% compared with 3.4% a month before, led by an easing of price increases on fresh food despite concerns about production during the cold wet spring.
Mike Watkins, the head of business insight at NielsenIQ, said: “After a number of months of falling input prices, we are now seeing food inflation stabilise and retailers continue to pass on price cuts to shoppers.”
After wage rises and tax cuts for many in April, Watkins said consumer sentiment was improving but “unseasonable weather” had put an additional dampener on demand so that promotional activity was likely to continue in an attempt to drive up spending.
Helen Dickinson, the chief executive of the BRC, said: “Shop price inflation has returned to normal levels, at just 0.6%. This was helped by slowing food inflation, with fresh food inflation falling to its lowest level since November 2021. Meanwhile, ambient food inflation remained stickier, especially for sugary products which continued to feel the effects of high global sugar prices.
“In non-food, retailers cut furniture prices in an attempt to revive subdued consumer demand for big-ticket items, and football fans have been able to grab some bargains on TVs and other audio-visual equipment ahead of this summer’s Euros.”
She called on the government to do more to help bring down inflation amid an increased burden on businesses from business rates and other levies.
“With an election in a matter of weeks, it is vital that parties detail their support for customers and retailers in their upcoming manifestos,” Dickinson said.
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The shop inflation figures will feed hopes that the biggest bump in inflation for 40 years has passed, which could prompt the Bank of England to begin cutting interest rates within months to help ease pressure on households.
The number of visitors to shopping destinations was down almost 1% year on year in the week to 19 May according to the advisory firm BDO’s regular survey of mid-sized retailers, many of which are fashion chains, showing a 0.5% year on year dip in sales at established stores in the week to 19 May.
That was offset by a big jump in online sales to drive a near-4% rise in total sales.