Cheaper tea and milk help shop price inflation fall to lowest since May 2022

Shop price inflation fell in January to its lowest rate since May 2022 as retailers offered heavy discounts to entice customers, figures show.

January’s shop prices eased to 2.9% higher than a year ago, down from 4.3% in December and below the three-month average of 3.9%, according to the British Retail Consortium (BRC)-NielsenIQ Shop Price Index.

Inflation on non-food products fell to 1.3% in January, down from 3.1% in December – the lowest rate since February 2022.

Food inflation also slowed, to 6.1% in January from December’s 6.7%, the ninth consecutive fall and the lowest rate since June 2022.

The BRC said the easing is “good news for the morning brew” as the price of tea and milk fell, while alcohol remained more expensive on the back of increased duties.

Fresh food inflation slowed further to 4.9%, down from 5.4% a month earlier.

BRC chief executive 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.

“Rising geopolitical tensions will also add to uncertainty and costs in supply chains.”

Mike Watkins, head of retailer and business insight at NielsenIQ, 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 two years of inflation.”