Shop price inflation fell to its lowest level since May 2022, helped by supermarkets continually slashing their prices.
A new reading by the British Retail Consortium (BRC) showed shop price inflation eased to 2.9 per cent in January, down from 4.3 per cent in December.
Food inflation also decelerated to 6.1 per cent down slightly from the prior month, and is the lowest level since June 2022.
This month’s decline does not mean food prices are decreasing, just the rate at which they are rising has slowed.
Over the summer, the cost of groceries climbed to highs of over 14 per cent, however has since edged down thanks to supermarkets getting competitive about keeping prices low.
In January, Helen Dickinson said the price of tea and milk fell, but alcoholic drinks remained more expensive on the back of increased alcohol duties.
“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.
It carries on from a bumper Christmas enjoyed by UK’s biggest grocery stores.
Grocery giant Tesco upgraded its profits guidance thanks to shoppers splashing on their premium range, and Sainsbury’s said sales grew over eight per cent during the term.
Rival firms offered discounts to shoppers via their loyalty cards, a trend which has got increasingly popular amid the economic squeeze.
Reports of prices continually edging down come despite the annual rate of consumer price inflation (CPI) speeding up for the first time in 10 months in December, rising to four per cent from November’s-two-year low of 3.9 per cent.
Dickinson also said progress will likely be hampered by new cost pressures coming directly from the government.
She explained: “[This includes] 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.”