Prices Show Signs of Easing Inflation Pressure Before Bank of England Policy Decision
LONDON (Reuters) – According to the British Retail Consortium (BRC), prices in British shops have witnessed the slowest annual growth since May 2022. This development adds to a growing indication of easing inflation pressures just ahead of the upcoming Bank of England (BoE) policy decision this week.
In January, the BRC reported a drop in shop price inflation to 2.9% from December’s 4.3%. The decline is attributed to heavier discounting during January sales this year compared to the previous year.
Non-food prices experienced a mere 1.3% increase, the lowest since February 2022. Meanwhile, food prices rose 6.1% on the year, representing the smallest increase since June 2022. This increase in food prices was partially offset by lower prices for tea and milk but impacted by higher alcohol duties.
Mike Watkins, the head of retailer and business insight at NielsenIQ, remarked that lower wholesale costs have allowed supermarkets to reduce the price of certain goods. However, consumer demand remains fragile, with most households yet to feel the benefits after nearly two years of inflation.
It is worth noting that Britain’s headline consumer price inflation, covering a broader range of goods and services compared to the BRC data, rose to 4.0% in December from 3.9% in November. This figure represents the lowest rate since September 2021. Nevertheless, inflation has fallen at a faster rate than predicted by the Bank of England in early November, largely due to a significant drop in energy costs.