British Store Prices Rise at Slowest Pace in Nearly a Year, Offering Relief for Consumers and the Bank of England
LONDON, Aug 29 – Prices in British store chains have seen the slowest increase in nearly a year, providing relief for consumers grappling with high inflation and the Bank of England’s efforts to control it, according to industry data released on Monday.
The British Retail Consortium (BRC) reported that annual shop price inflation dropped to 6.9% in August, marking its lowest level since October 2022 and a significant decrease from July’s 7.6%.
Inflation in food prices also saw a decline, falling to 11.5% from July’s 13.4%. This was driven by slower increases in the prices of meat, potatoes, and certain cooking oils. Non-food inflation, on the other hand, remained steady at 4.7%.
Helen Dickinson, the Chief Executive of the BRC, noted that these figures would have been even lower if the government hadn’t increased alcohol duties earlier this month.
Although prices rose by 0.5% on a month-on-month basis, they had actually fallen in July for the first time in two years when compared to June.
The BRC’s inflation measure, which tracks prices of goods sold in stores, serves as an initial signal for the broader official consumer price index. The consumer price index fell from a peak of over 11% in October 2022 to 6.8% in July.
However, inflation in the UK still remains over three times higher than the Bank of England’s target. Investors have already anticipated a 15th consecutive increase in interest rates, from 5.25% to 5.5%, following the Monetary Policy Committee’s scheduled meeting on September 21.
This news brings some respite for UK consumers who have been grappling with soaring prices for essential goods and services. The drop in shop price inflation indicates that the cost of living may eventually stabilize, offering hope for households that have been burdened by the rising cost of everyday items.
The decline in food price inflation, driven by slower increases in meat, potatoes, and cooking oils, is particularly significant. These are basic necessities that British households rely on, and any moderation in their prices will undoubtedly be welcomed.
The BRC’s report also highlights the impact of government policies on prices. The increase in alcohol duties earlier this month has contributed to the overall rise in prices. This is an important reminder that government decisions can have a direct impact on the cost of living for consumers.
While the drop in shop price inflation is encouraging, it is worth noting that inflation in the UK is still significantly higher than the Bank of England’s target. With investors expecting another interest rate hike in September, the central bank is likely to continue its efforts to curb inflation and bring it closer to the desired level.
As the cost of living remains a top concern for many in the UK, the Bank of England’s actions will be closely watched. It is crucial to strike a balance between controlling inflation and ensuring that economic growth is not stifled.
The BRC’s data provides valuable insights into the current state of prices in British stores. As the broader official consumer price index often follows a similar pattern, this report offers a glimpse into potential future trends. Consumers and policymakers alike will be watching closely to see if the slowdown in inflation continues in the coming months.
More detail via Reuters here… ( Image via Reuters )