UK retailers keep prices low as shop price inflation eases

UK shop price inflation slowed to 0.9% in July, according to the British Retail Consortium's (BRC) Shop Price Monitor, as retailers increased promotional activity across clothing, footwear and food to help consumers manage the cost of living.

The rate of shop price inflation fell from 1.2% in June, while non-food inflation eased to 0.2% from 0.6%. Food inflation also slowed to 2.2%, down from 2.4% the previous month, although fresh food inflation edged up to 3.1%.

The BRC said retailers competed to limit price rises with a wave of summer promotions. Clothing and footwear retailers offered significant discounts to clear seasonal stock, while shoppers also benefited from deals on snacks and alcoholic drinks during the football World Cup.

Helen Dickinson, Chief Executive of the BRC, said: “Good news for households in July as shop price inflation slowed. Retailers competed hard to limit price rises, with a wave of summer promotions across food and other goods.”

She added that categories including electricals and health & beauty saw higher inflation as rising chip prices and manufacturing costs fed through to prices.

Despite the slowdown in inflation, Dickinson warned that retailers continue to face mounting cost pressures from higher employment costs, packaging taxes, global instability and climate-related disruption.

“The best way to keep the cost of living down is to keep the cost of doing business down. Cutting unnecessary taxes and levies on energy bills would help retailers keep prices low, invest locally and support jobs in every town and city,” she said.

Mike Watkins, Head of Retailer and Business Insight at NIQ, said lower shop price inflation would provide some relief for households facing rising energy and fuel costs.

“We can expect promotions to continue to be an important part of driving demand for the rest of the summer,” he added.

The figures come after official data from the Office for National Statistics showed UK retail sales rose unexpectedly in June, with clothing and footwear retailers benefiting from warm weather and increased promotional activity. Online shopping also reached its highest share of retail sales since spring 2021.

However, retailers continue to warn that trading conditions remain challenging. Last week, the BRC renewed its calls for wider business rates reform, arguing that the sector has faced an additional £6.5 billion in employment costs since 2024, alongside higher business rates and other operating expenses.