- Written by Faria Masoud and Michael Rees
- Business correspondents, BBC News
Image source, Getty Images
A slowdown in tea prices helped ease inflation in January
Shop prices rose at their slowest rate in more than 18 months in January, according to the latest report from the British Retail Consortium (BRC).
Inflation – the rate at which prices rise – has reached near-record levels recently, leading to a cost-of-living crisis.
However, cuts and lower milk and tea prices brought shop price inflation down to 2.9%, from 4% in December.
In general, prices are still rising in stores but at a slower rate.
On average, food prices are still rising by more than 6% annually.
The BRC, which represents some of the UK’s biggest retailers, said shop price inflation in January was at its lowest level since May 2022.
Post-New Year’s cuts also helped slow the rate of rise in prices of non-food products, which fell to 1.3%, down from 3.1% the previous month.
However, the British Retail Consortium warned in its report that many households have not felt the benefit of lower inflation, adding that there are risks that price rises could accelerate again.
Helen Dickinson, chief executive of the British Retail Consortium, said progress in slowing price rises was likely to be hampered by other cost pressures, including the implementation of the increase in the National Living Wage and the rise in business rates in April.
“Rising geopolitical tensions will also increase uncertainty and costs in supply chains. With a general election later this year, we want to see political parties outline how they will help unlock investment across the country, rather than the current path, which is “It does very little.” “The opposite,” said Mrs. Dickinson.
Dry January
Separate data from research firm Kantar said food inflation fell at a slower rate in January due to fewer people buying promotional items compared to December.
About 86 million additional lunch boxes will be moved to work in 2023 as people seek to manage budgets more closely, she said.
“As Dry January sets in for consumers across the country, spending on alcohol has more than halved compared to December,” said Fraser McFate, head of retail and consumer at Kantar.
Nearly 6% of cases of beer sold in January did not contain low-alcohol options, representing a jump from 4% at the end of last year. Sales of the private label vegan ranges increased by 8% month-on-month with the launch of the Veganuary project, Kantar said.
Many shipping companies stopped ships using this route after the attacks launched by the Houthi rebels in Yemen. Last week, the United States and the United Kingdom launched military strikes against the Houthis.
But Mr McFate said: “There has been a lot of speculation about the impact the Red Sea shipping crisis might have on the cost of goods, but the story in grocery aisles in January this year is more about the battle between supermarkets to offer the best value, rather than From political geography.
“Retailers have moved away from promotions a bit as we head into the new year, meaning inflation has not fallen as quickly.”
He added that attention will now turn to Valentine’s Day to see whether couples will choose more simple celebrations again, as they did in 2023.
However, although tobacco and alcohol prices remain high, there is some hope that headline inflation will fall to near the Bank of England’s 2% target, as energy bills are expected to fall in 2024.
The expected decline in inflation has raised hopes that the bank will cut its key interest rate, which is currently at a 15-year high.
The bank has increased interest rates 14 times since December 2021 in an attempt to tackle inflation, which has strained the finances of UK households over the past two years.
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