Shop price inflation remained unchanged in June at 1.2%, despite warnings of looming price hikes as a result of the Middle East crisis, according to the British Retail Consortium (BRC) and NIQ.
Prices were 1.2% higher than a year ago, above the three-month average of 1.1%. Non-food inflation increased slightly to 0.6% from May’s 0.5%, while food inflation fell to 2.4% from 2.7%.
Fresh Food Inflation Falls Significantly
Fresh food inflation saw a significant drop to 2.8% from May’s 3.4%, as bumper crops of local produce helped keep prices down. BRC chief executive Helen Dickinson said: “Food price growth eased, and as shoppers made the most of the sunshine, retailers helped keep the prices of summer treats such as strawberries and ice cream low thanks to bumper crops and strong competition.”
“In clothing and general merchandise, retailers responded to the hot weather with promotions across summer essentials in clothing, footwear and lighter household textiles, despite overall non-food inflation rising,” she added.
Retailers Aim to Keep Prices Low
Mike Watkins, head of retailer and business insight at NIQ, said: “Food inflation remains lower than a year ago helped by price reductions and higher levels of promotion. There was also some downward pressure on prices in non-food seasonal products such as gardening and DIY, all of which will help shoppers as they manage their household budgets.”
“With the potential for increased demand during the summer of sport, retailers will be looking to keep prices as low as possible for as long as possible,” he added.
Oil Prices Drop Following US-Iran Deal
The figures follow oil prices dropping to levels last seen before the war in the Middle East, as the Strait of Hormuz gradually reopened following the US-Iran peace deal. This sparks hope of easing cost-of-living pressures as prices begin retreating at the petrol pumps thanks to drops in wholesale crude costs.
The declines follow last week’s interim agreement to end the war and the reopening of the Strait of Hormuz, through which a fifth of the world’s oil and gas is normally shipped. The US and Iran signed a memorandum of understanding lasting 60 days, which has seen the US partially lift sanctions on Iranian oil exports.
