Shop price inflation slows further in May

The British Retail Consortium-NeilsenIQ shop price index print marked the lowest rate of shop price inflation since November 2021, and brought inflation below the three-month average of 0.9%.

Non-food prices continued to deflate, with an annual rate of -0.8% in May, compared to -0.6% in April.

That was the lowest deflation rate since October 2021, and was also below the three-month average, which was -0.4%.

Food inflation also decelerated, dropping to 3.2% in May from 3.4% in April, marking the 13th consecutive month of decline and the lowest rate since February 2022.

Fresh food inflation slowed to 2.0%, down from 2.4% in April, the lowest since November 2021.

Ambient food inflation decreased slightly to 4.8% from 4.9% in April, the lowest since June 2022.

Helen Dickinson, chief executive of the BRC, noted that shop price inflation had returned to normal levels, aided by a reduction in food inflation, particularly in fresh food.

"Meanwhile, ambient food inflation remained stickier, especially for sugary products which continued to feel the effects of high global sugar prices," she said.

"In non-food, retailers cut furniture prices in an attempt to revive subdued consumer demand for big-ticket items, and football fans have been able to grab some bargains on TVs and other audio-visual equipment ahead of this summer’s Euros."

Mike Watkins, head of retail and business insight at NielsenIQ, observed that food inflation was stabilising as retailers passed on price cuts to consumers.

"Across the industry whilst inflationary pressure has eased and there is some improvement in shopper sentiment, the unseasonable weather has dampened retail sales so lower prices look set to continue and promotional activity is likely to increase drive demand."

Reporting by Josh White for Sharecast.com.