Big price cuts in the January sales drove shop price inflation down to 2.9 per cent, the lowest level for more than a year.
The figure came down from 4.3 per cent in December after prices of gadgets, furniture and fashion goods were slashed to tempt shoppers.
Inflation for non-food items in January came down from 3.1 per cent to 1.3 per cent, which is the lowest level for almost two years.
The figures come from a monthly survey from the British Retail Consortium (BRC), which welcomed them as ‘New Year cheer’.
The BRC said the average increase in the price of food came down from 6.7 per cent in December to 6.1 per cent in January (stock photo)
Food costs are still high and continue to make life a struggle for millions, but showed some signs of dropping too.
The BRC said the average increase in the price of food came down from 6.7 per cent in December to 6.1 per cent in January.
Fresh food came down from 5.4 per cent to 4.9 per cent, while the rate of increase on packs and cans fell from 8.4 per cent to 7.7 per cent.
The price data is good news for shoppers, the government and the Bank of England, as they will help fuel the narrative that inflation is coming under control and there will be room for interest rate cuts later this year.
Chief Executive of the BRC, Helen Dickinson, said: ‘Some New Year cheer as January shop price inflation slid to its lowest level since May 2022.
‘Non-food goods drove the fall, as many retailers offered heavily discounted goods in their January sales to entice consumer spend amidst weak demand.’ She said there was good news for those who like a cuppa with annual falls in both the price of tea and milk.
But Miss Dickinson warned further falls in inflation are not guaranteed, saying: ‘Progress will likely be hampered by new cost pressures coming direct from government.
The price data is good news for shoppers, the government and the Bank of England, as they will help fuel the narrative that inflation is coming under control and there will be room for interest rate cuts later this year (stock photo)
‘These include implementing the increase in the National Living Wage on top of an above-inflation rise in business rates this April, a potential new grocer ‘surtax’ in Scotland, and ill-conceived recycling proposals.
‘Rising geopolitical tensions will also add to uncertainty and costs in supply chains. With a General Election later this year, we want to see political parties outline how they will help unlock investment across the country rather than the current trajectory which is doing just the opposite.’
Head of Retailer and Business Insight, NielsenIQ, Mike Watkinson, said: ‘Shoppers are seeing savings at the checkout with non-food retailers on promotion and food retailers continuing to reduce prices when the costs of goods fall.
‘However, consumer demand remains fragile as most households are yet to feel better off after nearly 2 years of inflation.’
