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UK shop prices dipped month on month in July for the first time in two years, according to industry data published on Tuesday, adding to evidence that high inflation might finally be starting to ease.
The British Retail Consortium said shop prices in July were 0.1 per cent lower than in June, as the annual rate of inflation eased to 7.6 per cent from 8.4 per cent in June, and below the three-month average of 8.4 per cent.
The dip was caused partly by big discounts on clothing and footwear as retailers sought to lure customers put off by wet weather. Non-food prices fell 0.2 per cent between June and July, taking the annual rate of inflation down to 4.7 per cent.
Food price inflation also slowed for a third consecutive month, with the annual rate easing from 14.6 per cent in June to 13.4 per cent in July — the lowest since December 2022. The BRC said the decline reflected price cuts for several key staples, including oils, fats, fish and breakfast cereal.
The figures corroborated other recent evidence that price pressures were finally easing even in the UK, where inflation has so far been more persistent than in the US or eurozone.
“While inflation remains high, the outlook is improving,” said Mike Watkins, head of retailer and business insight at research company NielsenIQ, which helps compile the BRC data.
Figures from the Office for National Statistics showed consumer price inflation fell unexpectedly sharply to 7.9 per cent in June from 8.7 per cent in May. Meanwhile, research company Kantar said this month that grocery inflation was easing — with manufacturers such as Premier Foods subsequently announcing they were planning no more price rises this year.
However, the data on shop prices will offer only partial reassurance to the Bank of England’s Monetary Policy Committee, which meets on Thursday to vote on a further increase in interest rates.
The nine-member panel said in June that it expected goods price inflation to decline this year, but it is more concerned that continuing strength in wages could feed persistently high inflation in services.
BRC chief executive Helen Dickinson said Tuesday’s figures were “cause for optimism” but added that there were still “dark clouds on the horizon”. She cited Russia’s withdrawal from the UN-brokered deal to export Ukrainian grain across the Black Sea and India’s new curbs on rice exports.
“We expect some global commodity prices to rise again as a result and food prices will be slower to fall,” said Dickinson.