Shop price inflation falls to lowest levels since November 2021

  • Annual inflation slid to 0.6% last month, according to the BRC and NielsenIQ
  • Food inflation abated for the 13th successive month, declining to 3.2% in May 

Price increases in shops have hit their lowest levels in more than two years thanks to falling furniture and television costs, industry data has revealed.

Annual inflation slid from 0.8 per cent in April to 0.6 per cent last month, the best result since November 2021, according to the British Retail Consortium and research firm NielsenIQ.

Food inflation abated for the 13th successive month, declining to 3.2 per cent in May despite elevated global sugar prices keeping the cost of confectionery goods high.

Lower inflation: Price increases in shops have hit their smallest levels in over two years, according to the British Retail Consortium and NielsenIQ

Meanwhile, deflation of non-food goods accelerated to -0.8 per cent, compared to the three-month average of -0.4 per cent.

The BRC noted retailers reduced furniture prices to try and boost depressed demand for big-ticket items while many football fans bought cheaper televisions and audio equipment in anticipation of this summer’s European Championships.

Mike Watkins, head of retailer and business insight at NielsenIQ, further suggested that bad weather continued contributing to prices dropping due to its negative impact on sales.

It follows the Office for National Statistics blaming poor weather for total UK retail sales slumping by an estimated 2.3 per cent in April, when there was just 79 per cent of average sunshine hours.

Last week, the ONS said wet conditions led to worse trade at clothing and footwear stores, which saw sales plunge by 5.1 per cent, and shops selling games, toys, furniture, and sports equipment.

Watkins said: ‘The unseasonable weather has dampened retail sales, so lower prices look set to continue and promotional activity is likely to drive demand.’

Britain’s retail industry has struggled for over two years as soaring energy and food prices, combined with rising interest rates, have hurt profit margins and weakened consumer spending.

However, easing inflation and increasing wages are leaving many firms hopeful of a revival in shop footfall and purchases over the coming months.

Having peaked at a four-decade high of 11.1 per cent in late 2022, the UK inflation rate has subsequently come down to just 2.3 per cent following a drop in oil and gas prices and successive interest rate hikes by the Bank of England.

Helen Dickinson, chief executive of the BRC, hailed the improving inflation figures, but warned: ‘As the cost burden of new policies rises – from business rates to packaging taxes – this affects not just the businesses, but their customers too.

‘With an election in a matter of weeks, it is vital that parties detail their support for customers and retailers in their upcoming manifestos.’