The British Retail Consortium (BRC) has called on the Bank of England to reduce interest rates following its decision to maintain the current rate at 5.25%. This comes as shop price inflation dropped to its lowest level in nearly two years, easing to 0.8% in May from 0.3% in April.
Helen Dickinson, Chief Executive of the BRC, warned that while the slowdown in inflation is positive, consumers still face high mortgage and rental costs. "With a general election looming, retailers are urging the next government to address business costs and simplify the tax system," she said.
Pressure on Households and Businesses
Despite the easing of shop price inflation, many households remain under financial strain. The BRC highlighted that food inflation has slowed significantly, falling to 3.2% in May from 3.4% the previous month. Non-food prices, however, saw a deeper deflation at -0.8%, compared to -0.6% in April.
"The Bank of England must act now to support economic recovery," Dickinson added. "Lower interest rates would provide much-needed relief to both consumers and businesses."
Political Implications
With the UK general election approaching, the BRC has urged all political parties to prioritise policies that reduce costs for retailers. The organisation emphasised the need for reforms in business rates and other fiscal measures to stimulate growth in the sector.
As the cost-of-living crisis persists, the retail industry continues to play a critical role in the UK economy. The BRC's latest figures underscore the challenges ahead, even as inflationary pressures show signs of easing.
