UK shop inflation back to ‘normal’ levels as election draws near

London: Price increases at UK retailers fell in early May to their lowest level in more than two years, adding to signs of an improving economic outlook.

The rise in shop prices slowed to 0.6 per cent in the first week of May, its lowest since the end of 2021, the British Retail Consortium (BRC) said on Tuesday (May 28). That was below the category’s three-month average of 0.9 per cent and its advance of 0.8 per cent in the same period last month.

Inflation is also falling in other categories in the BRC-NielsenIQ index. Increases in food prices slowed to 3.2 per cent in the May survey from 3.4 per cent the month before. Non-food, meanwhile, was deflationary for the second month in a row at -0.8 per cent in May versus minus -0.6 per cent in April.

“Retailers cut furniture prices in an attempt to revive subdued consumer demand for big-ticket items, and football fans have been able to grab some bargains on TVs and other audio-visual equipment” ahead of this summer’s Euro tournament, said Helen Dickinson, chief executive of the BRC.

Signs of an improving economic outlook will be welcome to Prime Minister Rishi Sunak ahead of the Jul 4 general election. Still, polls indicate his Conservative Party is set to lose to Labour after 14 years in government.

Traders had been guessing that easing inflation will spur the Bank of England to cut interest rates in June. But last week, a stronger than expected Consumer Price Index reading prompted them to pare back bets.