Shop price inflation dropped to its lowest rate this month in almost two years as food inflation dropped for the ninth consecutive month.
Shop prices eased to 2.9% in January, down from 4.3% last month and below the three-month average of 3.9%, the latest BRC-NielsenIQ Shop Price Index shows.
Food price rises slowed to 6.1% in January from December’s 6.7%, making it the lowest rate since June 2022.
Non-food inflation fell to 1.3%, down from 3.1% last month as retailers cut prices to encourage shoppers during the January sales.
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A drop in production costs and higher interest rates over the past year also helped to lower inflation.
BRC chief executive Helen Dickinson said: “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.”
However, she warned of “obstacles on the road ahead” which could pose a risk to falling inflation.
“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.
Dickinson added that rising geopolitical tensions such as the ongoing disruption in the Red Sea will add uncertainty and costs in supply chains.
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