Responding to the latest CPI inflation figures, which show that headline inflation fell slightly to 2.6% and food inflation falling to 1.7% in June, Harvir Dhillon, economist at the British Retail Consortium (BRC), says: “The drop in both headline and food inflation is good news for households, who are benefitting from summer deals.
"Food inflation had a particularly notable drop, its lowest in almost two years, with prices falling on the month. This was driven largely by intense competition between supermarkets, trying to entice their customers during a warm spell of weather, despite supply chain pressures. It is vital that the new Government prioritises maintaining this momentum and works with retailers to keep prices down, as any reduction in cost burdens will help keep a lid on prices.
“Retailers are already facing immense financial pressure, squeezed by higher National Insurance, the triple packaging tax, and other input cost increases tied to the conflict in Iran. If retailers are to keep prices affordable for consumers in the long run, the Government needs to take practical steps to lower the everyday cost of doing business.
"Andy Burnham has taken immediate action to ease pressure on household budgets – he must now look to do the same for businesses, by cutting non-commodity charges on energy, and reducing the employment cost burden to help tackle the youth unemployment crisis.”
Furniture, household equipment and maintenance inflation decreased to -0.2% in June, from -0.1% in May.
Andrew Phillips, MD of V12 Retail Finance, comments: "The fall in inflation to 2.6% is positive news for households and businesses alike. Easing price pressures should help support confidence and provide some much-needed breathing space for consumers who have faced a challenging cost environment over recent years. Greater stability in inflation is also important for businesses as they plan investment and growth.
"However, the economic picture remains finely balanced. While lower fuel and transport costs have helped drive inflation lower, ongoing volatility in global energy markets means there is still potential for renewed pressure filtering down to household budgets later this year. In that environment, responsible lending and borrowing remain as important as ever. Access to appropriate, well-managed credit can help consumers make important purchases and manage their finances effectively, while ensuring resilience for the wider economy."
