UK shop price inflation drops to 10-month low

(Sharecast News) - Shop price inflation in the UK slowed to its lowest level in 10 months in August, according to new data out from the British Retail Consortium (BRC). The BRC-Nielsen Shop Price Index, which measured the price changes of 500 of the most commonly bought items between 1 and 7 August, eased to 6.9% this month, the lowest reading since October 2022.

This comes after the SPI fell to 7.6% in July, its first monthly fall in two years.

The news will come as welcome relief to the Bank of England as policymakers continue to battle stubbornly high inflation with elevated interest rates.

August's fall in the SPI was driven by falling food inflation, which slowed significantly from 13.4% to 11.5%, particularly for fresh produce such as meat, potatoes and some cooking oils.

"These figures would have been lower still had the government not increased alcohol duties earlier this month," said BRC chief executive Helen Dickinson. "Across non-food categories, toiletries and cosmetics saw price growth ease as many key components became cheaper, meanwhile inflation for clothing and footwear increased as retailers unwound their extensive summer sales."

Mike Watkins, head of Retailer and Business Insight at NielsenIQ, pointed out that the unpredictable weather of recent weeks also had an impact: "Some high street retailers increas[ed] promotional activity and food retailers continu[ed] to extend price cuts, as the inflationary pressure coming from supply chains continues to lessen," he said.