Figures from the British Retail Consortium’s (BRC’s) NielsenIQ shop price index showed that the food inflation figure is below the three-month average rate of 1.8% and that the annual rate has eased considerably since the start of 2024.
Meanwhile, fresh food inflation slowed in January to 0.9%, down from 1.2% the month before, while ambient food inflation edged down to 2.5% – its lowest since February 2022.
Non-food remained in deflation at negative 1.8% in January, edging up from negative 2.4% in the preceding month. This is slightly above the three-month average rate of negative 2%.
Helen Dickinson, BRC’s chief executive, said: “While overall prices fell in January, the pace of shop price deflation eased. Extensive January sales was good news for bargain hunters, with non-food products showing significant discounts, particularly for furniture and fashion, but less good news for retailers needing to shift excess stock.
“This month’s figures also showed early signs of what is to come, with month-on-month food prices rising at their fastest pace since April last year. Ambient food saw a 1% jump as prices spiked for sugary products, chocolates and alcohol.
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“Price cuts and deflation may not last much longer, as retailers will soon feel the full impact of £7bn of new costs announced at the last Budget. Higher employer NICs, increased National Living Wage, and a new packaging levy mean that prices are expected to rise across the board. Government can help to mitigate the impact on consumers by ensuring its proposed reforms to business rates do not result in any store paying more in rates than they already do. Without action, UK households will feel the effects.”
Mike Watkins, head of retailer and business insight at NielsenIQ, said: “Shoppers continue to be unsure about spending and many are seeing a continued squeeze on their household incomes. So we expect non-food retailers to still promote and food retailers to still offer price cuts over the next few weeks, with shoppers managing their budgets by shopping smart and shopping around for wherever the savings are the most attractive.”
