Shop inflation steady in July as clothing and footwear prices drop

UK shop price inflation remained steady in July after a period of decline, amid concerns that economic uncertainty could push prices up again.

Annual inflation held at 0.2%, slightly below the three-month average of 0.3% and marking the lowest rate since October 2021, according to the British Retail Consortium (BRC)-NielsenIQ Shop Price Index.

Food inflation decreased further, dropping from 2.5% in June to 2.3%, the lowest rate since December 2021. Fresh food prices increased by 1.4% compared to a year ago, down from 1.5% in June.

Non-food items saw continued deflation, at 0.9% cheaper than a year ago, although this was a slight slowdown from June's 1% decrease.

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Shoppers could find bargains in summer clothing and books, as prices for these items fell for the seventh consecutive month due to weak demand.

However, the BRC cautioned that climate change effects on harvests and rising geopolitical tensions could drive inflation back up.

Helen Dickinson, BRC chief executive, said: "The 2023 declines in global food commodity prices have continued to lower food inflation rates throughout the first seven months of 2024. However, this trend shows signs of reversing, potentially increasing food prices again in the future."

"UK households, having endured high inflation in 2022 and 2023, enjoyed lower inflation levels in the first half of this year. Yet, the uncertain outlook for commodity prices due to climate change and geopolitical issues suggests renewed inflationary pressures might be imminent," she added.

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Mike Watkins, head of retailer and business insight at NielsenIQ, said: "With high inflation comparisons from last year, we can expect lower inflation levels for the coming months. But with household finances still tight, consumer confidence slowly improving, and poor summer weather, retailers must keep price increases minimal to encourage spending."

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