UK shop price inflation holds steady as food price growth eases

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UK shop price inflation steady

Highlights

Overall UK shop prices in June are 1.2% higher year-on-year, unchanged from May, with food price inflation easing to 2.4% from 2.7%.
Fresh food inflation drops to 2.8% from 3.4% due to strong strawberry crops and ice cream discounts during hot weather, while non-food prices rise 0.6%.
Retailers face higher National Insurance, triple packaging tax, and increased input costs, but seasonal promotions and favorable crops support restrained price growth.

June retail inflation data and cost pressures

As reported by the Reuters, overall shop prices in June are 1.2% higher than a year earlier, unchanged from May. The monthly survey of major retail chains shows food price inflation slows to 2.4% from 2.7%, while fresh food inflation drops to 2.8% from 3.4%.

The easing in food inflation comes as bumper strawberry crops and discounts on ice cream support lower price growth during a period of unusually hot weather across much of Britain. At the same time, non-food prices rise by 0.6% year on year in June, slightly faster than the 0.5% increase recorded in May.

BRC Chief Executive Helen Dickinson says a competitive market is keeping inflation in check for now, but retailers face mounting cost pressures. She points to higher National Insurance, the triple packaging tax and higher input costs linked to extreme weather and geopolitical tensions.

Implications for UK consumers and inflation trends

The June figures suggest seasonal promotions and favorable crop conditions are helping retailers limit price increases for shoppers, even as energy prices surge because of the war in Iran. Discounts on clothing and footwear also support consumer spending as warmer weather lifts summer demand.

The BRC measure, based on data collected between June 1 and June 7, covers a narrower range of goods than the UK's official consumer price inflation index. Official consumer price inflation holds at April's 13-month low of 2.8% in May, indicating retail pricing remains broadly aligned with a still-moderating inflation environment.

In our earlier article on the European Central Bank’s inflation response, we noted that policymakers see less need for the aggressive tightening used in 2022–23 and are now leaning toward more incremental, shock-based interest-rate adjustments. The piece highlighted President Christine Lagarde’s view that improved forecasting and the euro area’s resilience to recent energy and trade shocks allow the ECB to stay data-dependent while still aiming to bring inflation back toward its 2% target over the medium term.

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