Shop price annual inflation dropped to 6.9 per cent in August, down from 7.6 per cent in the previous month.

Data from the British Retail Consortium (BRC) found that overall inflation across UK shops declined to its lowest level since October last year, largely driven by a drop in food inflation.

During the four-week period, food inflation declined from 13.4 per cent in July to 11.5 per cent, its lowest since September last year.

Non-food inflation remained unchanged at 4.7 per cent.

“Better news for consumers as shop price inflation in August eased to its lowest level since October 2022," said Helen Dickinson, chief executive, BRC. "This was driven by falling food inflation, particularly for products such as meat, potatoes and some cooking oils."

She added that the figures would have been even lower if the government had not increased alcohol duties earlier in the month.

The chief exec warned that while inflation is on course to continue to fall, there are still supply chain risks for retailers to navigate.

"Russia’s withdrawal from the Black Sea Grain Initiative and its targeting of Ukrainian grain facilities, as well as poor harvests across Europe and beyond, could serve as potential roadblocks to lower inflation," she continued. "A potential £400 million hike to business rates bills from next April would certainly jeopardise efforts to tackle inflation unless the Chancellor intervenes.”

Mike Watkins, head of retailer and business insight at NielsenIQ, which partners with the BRC on monthly inflation figures, said that unpredictable weather in recent weeks has dampened consumer demand with some High Street retailers increasing promotional activity and food retailers continuing to extend price cuts.

"Looking ahead, a NIQ survey shows that 60 per cent of households expect to be severely or moderately impacted by rising household costs in the coming months so once back from summer holidays, we expect consumers to remain cautious about discretionary spend even as inflation decelerates," he said.

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