Price pressures ease as food inflation slows

THE SQUEEZE on consumer finances eased again in June, retail industry figures showed today, with shop price inflation falling to its lowest level in two and a half years.

Inflation dropped to 1.1 per cent in the year to June from 1.4 per cent in May, according to the British Retail Consortium (BRC) – a slowdown that analysts hope will give a boost to consumer spending.

Food price inflation is near a two-year low at 3.5 per cent in the year to June, down from 4.3 per cent in the year to May.

Meanwhile the price of non-food goods fell 0.3 per cent on last June – the fifth consecutive monthly decline, as retailers slash prices to counter sluggish demand.

That deflation was driven by a 4.8 per cent fall in the price of clothing and footwear on the year, as well as a 3.1 per cent drop in electricals prices and a 0.2 per cent drop in books, stationery and home entertainment.

DIY, gardening and hardware price inflation fell to 1.6 per cent in the year to June – a three-year low.

“With real disposable incomes still dropping, let’s hope there’s more downward pressure to come from past falls in commodity prices working through to inflation,” said the BRC’s Stephen Robertson.