Store price inflation falls to near-2 year low, BRC data shows

A man shops in a UK supermarket amid inflation crisis

Shop price inflation eased again in February, BRC data shows

(Image credit: Getty Images)

published 27 February 2024

Inflation in retailers has fallen to its lowest rate in almost two years with food prices driving the drop, new figures from the British Retail Consortium (BRC) have shown.

The trade body for UK stores, including supermarkets, found price hikes slowed to a rate of 2.5% in February - down from 2.9% a month before. Much of this fall came as a result of a 1.1 percentage point deceleration in food inflation to 5%.

Easing energy and fertiliser costs in the food supply chain helped to bring the rate of supermarket price hikes down. However, it still remains above the rate of the Consumer Prices Index (CPI) - the UK’s official measure of inflation - which is sitting at 4%.

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Within the food figures, inflation for ambient goods (such as tinned ingredients, rice and pasta) remained significantly higher than headline inflation at 7.2%. But the rate had reduced from 7.7% in January. Fresh food price rises fell month-on-month from 4.9% to 3.4% - the lowest level recorded since February 2022. Meat, fish and fruit led the decrease.

Non-food inflation remained at 1.3%, 0.7 percentage points below the category’s three-month average of 2%. Although inflation went up across the furniture, electricals and health and beauty categories, promotional activity in clothing kept the rate at January’s level. The BRC took its figures from the week of 1 to 7 February.

Reflecting on the figures, Mike Watkins, the head of retailer and business insight at Nielsen IQ - the data analytics firm the BRC compiles its research with, said: "Shop price inflation has slowed and the underlying trend in prices will be downwards over the next few months.

“Since the start of the year, food retailers in particular have reduced prices as well as passing on price cuts coming through supply chains. For high street retailers faced with weaker demand, keeping prices stable over the next few months will be key to encourage customers to spend.”

The news comes as households are set to be hit by a series of significant hikes to utility bills in March and April. But there was good news last week as it emerged energy costs would fall for most households as a result of a big reduction in the Ofgem energy price cap.

‘Good news - but inflation pressures remain,’ BRC warns

Chief executive of the BRC, Helen Dickinson, said the findings should be seen as “good news” for consumers. However, she warned inflation could yet go up again as a result of international and UK-specific issues.

“Easing supply chain pressures have begun to feed through to food prices, but significant uncertainties remain as geopolitical tensions rise,” she said. “Prices of non-food goods will be more susceptible to shipping costs, which have risen due to the re-routing of imports around the Cape of Good Hope.

“Domestically, retailers face a major rise to their business rates bills in April, [which were] determined by last September’s sky-high inflation rate. April’s rates rise should be based on April’s inflation, and the Chancellor should use the Spring Budget to make this correction, supporting business investment and helping to drive down prices for consumers.”

Jeremy Hunt is set to deliver his Budget speech on 6 March. The Chancellor’s speech comes against the backdrop of a recession, which was confirmed earlier in February.

Henry Sandercock has spent more than eight years as a journalist covering a wide variety of beats. Having studied for an MA in journalism at the University of Kent, he started his career in the garden of England as a reporter for local TV channel KMTV.

Henry then worked at the BBC for three years as a radio producer - mostly on BBC Radio 2 with Jeremy Vine, but also on major BBC Radio 4 programmes like The World at One, PM and Broadcasting House. Switching to print media, he covered fresh foods for respected magazine The Grocer for two years.

After moving to NationalWorld.com - a national news site run by the publisher of The Scotsman and Yorkshire Post - Henry began reporting on the cost of living crisis, becoming the title’s money editor in early 2023. He covered everything from the energy crisis to scams, and inflation. You will now find him writing for MoneyWeek. Away from work, Henry lives in Edinburgh with his partner and their whippet Whisper.