Shop Prices in the UK

LONDON (Reuters) – Prices in British shops rose at the joint-slowest rate since October 2021 this month, restrained by a decline in non-food item costs while food prices continued to increase, according to the British Retail Consortium (BRC) on Tuesday.

In July, shop prices were on average 0.2% higher than a year earlier, matching the annual increase seen in June and marking the joint lowest since October 2021.

Food and Non-Food Price Trends

Food prices rose by 2.3%, the smallest increase since December 2021, while non-food prices experienced a drop of 0.9%.

BRC Chief Executive Helen Dickinson noted that holidaymakers could find bargains in summer wear and reads, as clothing and footwear prices fell for the seventh consecutive month due to persistent weak demand, and book prices also decreased.

On Monday, the Confederation of British Industry highlighted a decline in retailers’ sales this month, attributed to adverse weather and poor overall trading conditions.

Economic Context

Many Britons continue to feel the financial strain following a surge in inflation during 2022 and 2023, although wages have recently begun to recover lost ground. The UK’s headline consumer price inflation, targeted by the Bank of England, remained at its 2% target in June, but is expected to rise as the impact of declining energy prices from the previous year dissipates.

The Bank of England (BoE), which may cut interest rates on Thursday, is particularly focused on services price inflation, which stood at 5.7% in June, well above the central bank’s forecast.

However, Dickinson cautioned that food prices might soon rise again as the effects of last year’s drop in commodity prices diminish. Climate change is also affecting harvests following unusually wet weather in England and extreme heat in other areas.

The BRC figures were based on prices collected by NielsenIQ between July 1 and July 7.