Despite the slowdown, food inflation remains the main cause of upward pressure on shop prices.
And the effects of last month’s floods are yet to be reflected in food prices, BRC-Nielsen said.
Non-food prices continue to fall, dropping by 0.4% in July, slightly less than the 0.9% drop recorded in June. “This was the result of several retailers’ decision to bring forward their usual July discounting into the final week of June,” the report said.
BRC director general Kevin Hawkins commented: “Food inflation is being driven by supply and demand factors impervious to interest rate changes. If, as a result of this month’s heavy rainfall, food inflation increases over the next few months, a further hike in interest rates will do nothing to curb it.”
