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Shop Price Growth Softest Since May 2022

UK DATA

BRC-NielsenIQ Shop Price inflation decelerated to +2.9% Y/Y in January (vs +4.3% Y/Y prior), whilst shop price inflation fell for the first time since July 2023 by -0.7% M/M (vs +0.4% growth in December). Note that we have not seen a M/M fall of -0.7% since January 2021.

  • The disinflation was due to both food and non-food inflation components falling to +6.1% Y/Y (vs +6.7% Y/Y prior) and +1.3% Y/Y (vs +3.1% Y/Y prior).
  • The rate of disinflation in non-food has increased relative to food prices, as non-food prices deflated on a monthly basis.
  • In the graph below, it shows disinflation continuing, with both the BRC price growth and ONS NEIG and Food inflation rate declining since around May-23.
  • The latest BRC print indicates that NEIG inflation is likely to continue this trend in the coming month.
  • Chief Executive of the BRC cautioned whilst progress is being made, "Rising geopolitical tensions will also add to uncertainty and costs in supply chains."
  • This week is likely to see the MPC keep rates on hold at 5.25%, however the market will be focused on the vote split, any change to the guidance and the Bank's new inflation forecasts.


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