Store price inflation eased to its lowest level since November 2021 as retailers slashed prices on big-ticket items such as furniture and televisions as rising living costs and bad weather forced households to severely curb spending.
According to the latest research from the British Retail Consortium (BRC) and market research firm NielsenIQ, inflation rose 0.6% year-on-year in May, down from 0.8% in April and the lowest growth since November 2021.
The decline was mainly driven by non-food prices, which fell 0.8% year-on-year in May, marking the second consecutive month of deflation and the biggest drop in inventory prices since 2021.
Food prices rose 3.2% from 3.4% the previous month as price increases for fresh produce eased despite concerns about production following a cold, wet spring.
“Following months of falling raw material prices, food inflation has stabilised and retailers continue to pass on price savings to consumers,” said Mike Watkins, head of business insights at NielsenIQ.
Watkins said consumer sentiment was improving after wage increases and tax cuts came into effect for many in April, but “unseasonable weather” was further suppressing demand and promotional activity to boost spending was likely to continue.
Helen Dickinson, BRC chief executive, said: “Shop price inflation has returned to more normal levels at just 0.6%. This has been supported by slower food inflation, with fresh food inflation falling to its lowest level since November 2021. Meanwhile, general food inflation remains elevated, particularly for sugar products which continue to be affected by high global sugar prices.”
“Apart from food, retailers have slashed prices on furniture in an attempt to revive depressed consumer demand for big-ticket items, while football fans have been able to buy bargains on televisions and other audio-visual equipment ahead of this summer’s Euros.”
She called on the government to do more to curb inflation as business tax and other levies place increasing burdens on businesses.
“With the election just a few weeks away, it’s important that political parties detail their support for customers and retailers in their upcoming manifestos,” Dickinson said.
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The shop inflation figures will bolster hopes that the biggest rise in inflation in four decades is over and could prompt the Bank of England to start cutting interest rates within months to ease pressure on households.
Visits to shopping destinations were down about 1% year-on-year in the week to May 19, while same-store sales were down 0.5% year-on-year in the week to May 19, according to a regular survey of mid-sized retailers, many of which are fashion chains, by consulting firm BDO.
However, this was offset by a strong increase in online sales, which helped total sales increase by nearly 4%.
