In May, the United Kingdom saw a continuation of the downward trend in annual shop-price inflation, marking the 13th consecutive month of easing, according to a report jointly released by NielsenIQ and the British Retail Consortium (BRC) on Tuesday.
The data revealed that shop-price inflation in the U.K. moderated to 0.6% year-on-year in May, down from the 0.8% recorded in April. This figure falls below the three-month average rate of 0.9%, indicating a sustained decline in price pressures within the retail sector. In fact, this represents the lowest level of shop-price inflation observed since November 2021.
Food inflation, an area significantly impacted by the cost-of-living crisis over the past couple of years, saw a slight decrease to 3.2% in May from 3.4% in April. This decline was primarily driven by falling prices of fresh produce, contributing to the overall easing of inflationary pressures in the food segment, as highlighted by BRC Chief Executive Helen Dickinson.
Conversely, the non-food segment experienced deflation, with prices declining by 0.8% compared to a 0.6% drop in the previous month. This trend was fueled by discounts on furniture prices aimed at stimulating demand for big-ticket items amid subdued consumer spending. Additionally, retailers offered bargains on TV and other audiovisual equipment ahead of major events such as the Euros, further contributing to the deflationary environment, Dickinson noted.
Looking ahead, Mike Watkins, head of retailer and business insight at NielsenIQ, expressed expectations for a continued drop in price inflation. He highlighted that while inflationary pressures have alleviated and shopper sentiment has shown some improvement, unseasonable weather conditions have dampened retail sales. Consequently, lower prices are anticipated to persist, with promotional activity likely to drive demand in the coming months.
The report underscores the ongoing impact of various factors on consumer spending habits and the broader retail landscape in the U.K. As the country navigates economic challenges and shifts in consumer behavior, retailers continue to adapt their strategies to meet evolving demands and market conditions.