UK shop prices flat in May, food inflation accelerates

UK shop price deflation held steady at 0.1 per cent year on year in May, unchanged from April and above the three-month average of -0.2 per cent, according to figures released on Tuesday by the British Retail Consortium (BRC) and NielsenIQ.

Food prices continued to climb, with annual inflation rising to 2.8 per cent in May from 2.6 per cent in April. Fresh food prices were the main driver, up 2.4 per cent compared to 1.8 per cent in the previous month. In contrast, ambient food inflation slowed to 3.3 per cent from 3.7 per cent.

Non-food deflation eased slightly to 1.5 per cent, compared with a 1.4 per cent fall in April, as fewer discounts were offered in categories like fashion and furniture. Electrical goods saw sharper price drops as retailers looked to spur demand ahead of possible fallout from US tariffs.

BRC Chief Executive Helen Dickinson warned that rising operational costs, including April’s £5 billion hike in National Insurance and National Living Wage costs, were adding pressure on prices. “Retailers now face a further £2 billion in costs from upcoming packaging taxes and employment legislation. Without government support, households could face renewed price rises,” she said.

Head of Retailer and Business Insight Mike Watkins noted that while promotions are helping shoppers save, weak consumer confidence and rising household bills may weigh on summer spending.

Attribution: Amwal Al Ghad English
Subediting: M. S. Salama