Shop price inflation unchanged but pressures 'lurking' - BRC

29th Jul 2024 08:34

(Sharecast News) - UK shop inflation was unchanged in July, but cost pressures were "lurking over the horizon" as commodity prices remained at risk from climate change and geopolitical tensions, according to the British retail Consortium.

Shop price annual inflation was unchanged at 0.2%, below the three-month average rate of 0.3%, while annual growth remained at its lowest rate since October 2021, the BRC/NielsenIQ survey found.

Non-Food remained in deflation at -0.9% in July, up from -1.0% in the preceding month, while food inflation slowed to 2.3% from 2.5% in June. A poor summer and weak demand saw clothing and footwear prices down for the seventh consecutive while book prices also fell.

Fresh Food inflation slowed further in July, to 1.4%, down from 1.5% in June. This is below the 3-month average rate of 1.6%. Inflation is its lowest rate since November 2021.

"The 2023 declines in global food commodity prices continued to feed through, helping bring down food inflation rates over the first seven months of 2024. However this shows signs of reversing, suggesting renewed pressure on food prices in the future," said BRC chief executive Helen Dickinson.

Sports gatherings for Wimbledon and the Euros benefited from discounted snacking items such as crisps and soft drinks. she added.

"With the outlook for commodity prices remaining uncertain due to the impact of climate change on harvests domestically and globally, as well as rising geopolitical tensions, renewed inflationary pressures could be lurking just over the horizon."

Mike Watkins, head of retailer and business insight at NielsenIQ, said shoppers can expect a lower level of inflation "for a number of months to come", but warned that with a continuing squeeze on household finances, slow rebound in consumer confidence and poor summer weather so far, "retailers will still need to keep any price increases to a minimum to encourage shoppers to spend".

Reporting by Frank Prenesti for Sharecast.com