The British Retail Consortium (BRC) found that food inflation rates had “eased considerably since the start of 2024” but may not last much longer.
Shop price deflation was 0.7% in January, above deflation of 1% in the previous month. This is slightly above the 3-month average rate of -0.8%.
Food inflation eased to 1.6% in January, down from 1.8% in the month preceding. This was below the 3-month average rate of 1.8%, and the annual rate has “eased considerably” since the start of 2024.
Fresh food inflation slowed in January to reach 0.9%, down from 1.2% in December 2024. This was slightly below the 3-month average rate of 1.1%.
Ambient food inflation edged down to 2.5% in January, from 2.8% in December, which was below the 3-month average rate of 2.7% and remained at its lowest since February 2022.
Helen Dickinson, chief executive of the BRC, said: “While overall prices fell in January, the pace of shop price deflation eased. This month’s figures also showed early signs of what is to come, with month on month food prices rising at their fastest pace since April last year. Ambient food saw a 1% jump as prices spiked for sugary products, chocolates and alcohol.
“Price cuts and deflation may not last much longer as retailers will soon feel the full impact of £7 billion of new costs announced at the last Budget. Higher employer NICs, increased National Living Wage, and a new packaging levy mean that prices are expected to rise across the board. Government can help to mitigate the impact on consumers by ensuring its proposed reforms to business rates do not result in any store paying more in rates than they already do. Without action, UK households will feel the effects.”
Mike Watkins, head of retailer and business insight, NielsenIQ, said: “Shoppers continue to be unsure about spending and many are seeing a continued squeeze on their household incomes. So we expect non-food retailers to still promote and food retailers to still offer price cuts over the next few weeks, with shoppers managing their budgets by shopping smart and shopping around for wherever the savings are the most attractive.”
