British shop prices have increased at the slowest rate in 2-1/2 years this month, according to the British Retail Consortium (BRC), indicating that sector inflation has returned to normal levels

after a recent surge.

In a positive development for the Bank of England, annual shop price inflation slowed to 0.6% in May from 0.8% in April, marking the smallest increase since November 2021, the BRC reported.

Non-food goods prices saw an annual decrease of 0.8%, following a 0.6% drop last month.

Food inflation has continued to decline for the 13th consecutive month, slowing to 3.2% from 3.4%, its lowest point since February 2022.

“After several months of falling input prices, we are now witnessing food inflation stabilise, with retailers continuing to pass on price cuts to consumers,” said Mike Watson, head of retailer and business insight at NielsenIQ, which provides data for the BRC.

“Although inflationary pressures have eased and shopper sentiment has slightly improved, unseasonable weather has dampened retail sales. As a result, lower prices are expected to persist, and promotional activities are likely to increase to drive demand,” Watson added.

The Bank of England is currently evaluating when to cut interest rates for the first time since 2020. The focus is particularly on the prices in Britain’s service sector, which are running close to 6%, in contrast to the more pronounced cooling in goods price growth. Photo by Whittle100, Wikimedia commons.