Shop Prices "Brought to Heel" says BRC
- Written by: Gary Howes
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Image © Adobe Stock
The British Retail Consortium says shop prices have been "brought to heel" as the trend of disinflation continued into April, raising hopes that the Bank of England can soon cut interest rates.
The BRC's Shop Price Index - a monitor of inflation trends in the retail sector - showed Shop Price annual inflation eased to 0.8% in April, down from 1.3% in March.
This is below the 3-month average rate of 1.4%. Shop price annual growth is its lowest since December 2021.
"One year on from the peak, shop price inflation levels are showing signs of normalising, providing relief to households. Both food and non-food have seen shop inflation rates ease to more manageable levels," says Helen Dickinson, Chief Executive of the British Retail Consortium.
Non-Food items entered deflation at -0.6% in April, down from 0.2% in the preceding month. This is below the 3-month average rate of 0.2%. Inflation is its lowest since October 2021.
"The prices of many non-food goods are now cheaper than a year ago," says Mike Watkins, Head of Retailer and Business Insight, NielsenIQ.
Food inflation decelerated to 3.4% in April, down from 3.7% in March. This is below the 3-month average rate of 3.9% and is the 12th consecutive deceleration in the food category. Inflation is its lowest since March 2022.
Fresh Food inflation slowed further in April to 2.4%, down from 2.6% in March. This is below the 3-month average rate of 2.7%.
Ambient Food inflation decelerated to 4.9% in April, down from 5.2% in March. This is below the 3-month average rate of 5.6% and is the lowest since June 2022.
Trends in retail prices will raise hopes the Bank of England can soon cut interest rates. Headline CPI inflation for April is expected to have fallen to below 2.0%, which will show up in May's official inflation release.
However, with services inflation still running close to 6.0%, many economists say inflation will rise back above the Bank's 2.0% target in later months.
Services and other core inflation measures are not below the 2.0% level, which must happen for a consistent and sustainable move below 2.0% for headline inflation.
Although goods and food prices are going in the right direction, unwelcome surprises elsewhere might yet limit the Bank's ability to cut interest rates.
