Shop price inflation has sunk to its lowest level since October 2021 as retailers turn to discounting to drive sales.
The British Retail Consortium (BRC) and NielsenIQ found prices edged up 0.2% in June, down from 0.6% the month before, marking its lowest annual growth in more than two and half years.
Non-food prices remained in deflation at -0.1%, down from -0.8% in May.
Food inflation fell back to 2.5% in June, compared with the 3.2% drop the month before, making it the fourteenth consecutive deceleration for the category.
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British Retail Consortium chief executive Helen Dickinson said: “During the height of the cost-of-living crisis, retailers invested heavily in improving their operations and supply chains to compensate for the impact of global shocks on input costs.
“This is clearly paying off, with shop prices having risen just 0.2% over the past 12 months. Food inflation is now lower than any time since 2021 helped by falling prices for key products such as butter and coffee.
“Meanwhile, non-food prices went deeper into deflation as retailers tried to drive sales by discounting. This was particularly true for TVs with great deals to capitalise on the Euros fever.”
Dickinson added that the next government “must address some of the major cost burdens weighing down the retail industry”, such as business rates and the apprenticeship levy so retailers can invest more into lowering prices.
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