Shop price deflation driven by retailers offering deep discounts, says BRC

Overall shop price deflation was 0.7% in January, above deflation of 1% in the previous month and slightly above the three-month average of -0.8%, according to the latest BRC-NielsenIQ shop price index data.

Non-food remained in deflation at -1.8% in the period, edging up from -2.4% in December.

Food inflation eased to 1.6% in January, down from 1.8% the previous month. The annual rate of inflation has eased considerably since the start of 2024.

Fresh food inflation slowed in January this year at 0.9%. This was down from 1.2% in December 2024, and slightly below the three-month average rate of 1.1%. Ambient food inflation meanwhile edged down to 2.5%.

BRC chief executive Helen Dickinson said: “While overall prices fell in January, the pace of shop price deflation eased. Extensive January sales were 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.

“This month’s figures also showed early signs of what is to come, with month-on-month food prices rising at their fastest pace since April last year. Ambient food saw a 1% jump as prices spiked for sugary products, chocolates and alcohol.

“Price cuts and deflation may not last much longer as retailers will soon feel the full impact of £7bn of new costs announced at the last Budget. Higher employer national insurance contributions, increased national living wage, and a new packaging levy mean that prices are expected to rise across the board. The 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. Without action, UK households will feel the effects.”