Shop price inflation slowed to 1.5% in June from 1.8% in May, according to BRC-Nielsen Shop Price Index.
It’s the second consecutive month that shop price inflation has fallen. The overall slowdown in inflation was driven by a sharp fall in food inflation to 1.7% in June, from 2.2% in May. A considerable proportion of the decrease was driven by fresh food, while ambient food inflation also fell markedly.
Annual inflation in the fresh food category slowed to 0.1% in June, from 0.7% in May. This was driven by an increase in the deflation rate of fish and vegetables, however, this was against strong comparisons a year ago.
Stephen Robertson, BRC director general, said: “The era of shop price volatility seems over for now. Low and stable inflation appears likely for the rest of the year.
“The fluctuations in commodity costs and exchange rates over the last 18 months have now fed through. Barring any major shocks, we’re not expecting sharp movements in price.
“Food inflation fell, largely because fresh food such as fish and vegetables were cheaper than a year ago. Non-food items, including electricals and clothing, continue to be cheaper than they were this time last year.
“In the face of weak demand, retailers will continue to use widespread discounts and promotions. But, given their thin margins, there will be little scope to absorb next year’s VAT increase. This will put significant pressure on inflation from January onwards.”
Source: BRC
