In July, the annual shop price inflation decelerated to 7.6%, showing a decline from the previous month’s rate of 8.4%. This figure is lower than the 3-month average of 8.4%.
Furthermore, food inflation also saw a deceleration, dropping to 13.4% in July from June’s 14.6%. This is below the 3-month average rate of 14.5% and marks the third consecutive decrease in the food category. Notably, this is the lowest level recorded since December 2022.
Similarly, non-food inflation also experienced a downward trend, decreasing to 4.7% in July compared to June’s 5.4%. This rate is also below the 3-month average of 5.3% and reaches the lowest level seen since December 2022.
Within the food category, fresh food inflation displayed a further slowdown, reaching 14.3% in July as opposed to June’s 15.7%. In parallel, ambient food inflation decelerated to 12.3% in July, down from 13%.
Helen Dickinson, OBE, chief executive of the British Retail Consortium, commented on these figures, stating “Food price inflation slowed to its lowest level this year, with falling prices across key staples such as oils, fats, fish, and breakfast cereals.”
However, Dickinson warns of potential challenges, mentioning “These figures give cause for optimism, but further supply chain issues may add to input costs for retailers in the months ahead.”
She highlights some concerns, such as Russia’s withdrawal from the Black Sea Grain Initiative and the subsequent targeting of Ukrainian grain facilities, as well as rice export restrictions from India. Dickinson acknowledges that these events may lead to an increase in global commodity prices and predicts that food prices will be slower to decline as a result.
In light of this situation, Dickinson emphasizes the importance of continued efforts by retailers to maintain falling prices. She also calls on the government to freeze business rates from next April, warning that failure to do so may place an additional £400 million of pressure on prices.
Offering insights into consumer behavior, Mike Watkins, Head of Retailer and Business Insight at NielsenIQ, mentions that the summer holiday period could provide some relief for discretionary spending. Additionally, he notes that while inflation remains high, the outlook is improving.
Watkins observes that shoppers are adapting their shopping habits as part of their coping strategies. This includes exploring different retailers, opting for lower-priced items, delaying purchases, or only buying during promotional periods. He predicts that this behavior will continue for the foreseeable future.
