Shop price deflation falls as BRC warns price cuts are coming to an end

Shop price deflation fell in January, as the British Retail Consortium (BRC) warned that prices may not stay low for much longer.

According to the latest figures from the BRC, shop Price deflation was 0.7 per cent in January, above deflation of 1.0 per cent in the previous month and slightly above the three-month average rate of 0.8 per cent.

Food inflation fell from 1.6 per cent in January compared to 1.8 per cent the previous month. This is below the three-month average rate of 1.8 per cent, with the retail trade association saying that the annual rate has eased “considerably” since the start of 2024.

Helen Dickinson, chief executive of the BRC, said that the figures are an early sign of what is to come as prices are rising at their fastest pace since April last year.

“While overall prices fell in January, the pace of shop price deflation eased,” Dickinson added. “Extensive January sales was good news for bargain hunters, with non-food products showing significant discounts, particularly for furniture and fashion, but less good news for retailers needing to shift excess stock.”

Earlier this month, the BRC said that food inflation will hit 4.2 per cent by the next half of 2025 due to increasing costs such as a higher National Living Wage and a new packaging levy.

Dickinson warned that price cuts will not last much longer as retailers start to feel the full impact of the estimated £7 billion in costs announced in Labour’s Autumn Budget.

“Government can help to mitigate the impact on consumers by ensuring its proposed reforms to business rates do not result in any store paying more in rates than they already do,” she added. “Without action, UK households will feel the effects.”



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