UK: Non-food remains in deflation as prices rise elsewhere

Over the period June 1 to 7, shop prices returned to inflation as costs imposed by last autumn’s Budget began to kick in. Overall inflation rose to 0.4 percent year-on-year in June, against a decline of -0.1 percent in May. This also came above the three-month average of 0.1 percent, according to the British Retail Consortium (BRC).

Food inflation drove the increase, rising 3.7 percent YoY. This contrasted non-food prices, which remained in deflation at -1.2 percent, reflecting a marginal increase on May’s -1.5 percent. The figure came above the three-month average of -1.4 percent.

In a statement, Helen Dickinson, chief executive of the BRC, said non-food goods “remained in deflation as retailers cut prices across product categories, especially DIY and gardening, so customers could make the most of the sunshine.”

Dickinson added: “Retailers have warned of higher prices for consumers since last year’s Autumn Budget and the huge rises to Employer National Insurance costs and the National Living Wage.

“We predicted a significant rise in food inflation by the end of this year, and this has been accelerated by geopolitical tensions and impacts of climate change. To limit further rises, the government must find ways to alleviate the cost pressures bearing down on retailers. The upcoming business rates reform offers such an opportunity, and the government must ensure no shop pays more as a result of the changes.”