UK inflation returns to normal – BRC

British shop prices saw their slowest rise in 2-1/2 years this month, with annual inflation at 0.6 per cent, the British Retail Consortium (BRC) reported on Tuesday.

The BRC said the new rate marks a return to normal after a recent surge in prices. Non-food goods prices fell by 0.8 per cent annually, while food inflation slowed for the 13th consecutive month to 3.2 per cent, the lowest since February 2022.

Mike Watson, head of Retailer and Business Insight at NielsenIQ that provides data for the BRC, said retailers are passing on price cuts to consumers, contributing to the easing of inflationary pressure.

“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. Across the industry whilst inflationary pressure has eased and there is some improvement in shopper sentiment, the unseasonable weather has dampened retail sales so lower prices look set to continue and promotional activity is likely to increase drive demand.” Watson added.

The Bank of England, observing these trends, is contemplating its first interest rate cut since 2020, particularly focusing on the service sector’s inflation running close to 6 per cent.