Shop price annual inflation eased to 2.9% in January, down from 4.3% in December, according to the latest data from BRC-NielsenIQ.
This was below the 3-month average rate of 3.9% – shop price annual growth is its lowest since May 2022.
Non-food inflation fell to 1.3%, down from 3.1% in December – its lowest since February 2022.
BRC chief executive Helen Dickinson says: “Some New Year cheer as January shop price inflation slid to its lowest level since May 2022. Non-food goods drove the fall, as many retailers offered heavily discounted goods in their January sales to entice consumer spend amidst weak demand.
“Retailers have spent the last eight months working to bring down inflation, but progress will likely be hampered by new cost pressures coming direct from Government – including implementing the increase in the National Living Wage on top of an above-inflation rise in business rates this April, a potential new grocer ‘surtax’ in Scotland, and ill-conceived recycling proposals. Rising geopolitical tensions will also add to uncertainty and costs in supply chains.
"With a general election later this year, we want to see political parties outline how they will help unlock investment across the country rather than the current trajectory which is doing just the opposite.”
Mike Watkins, head of retailer and business insight, NielsenIQ, adds: "Shoppers are seeing savings at the checkout with non-food retailers on promotion and food retailers continuing to reduce prices when the costs of goods fall. However, consumer demand remains fragile as most households are yet to feel better off after nearly two years of inflation.”
