Lower tea prices ease price rises in January

In-store price increases in January were the slowest in more than a year and a half, according to the latest report from the British Retail Consortium (BRC).

Inflation has recently reached near-record highs, creating a cost of living crisis.

However, in-store price inflation fell to 2.9% from 4% in December due to discounts and lower prices for milk and tea.

Overall, prices are still rising in stores, but at a slower rate.

On average, food prices are still rising more than 6% annually.

The BRC, which represents some of Britain's biggest retailers, said in-store price inflation in January was the lowest since May 2022.

Post-New Year discounts also slowed the rate of non-food price increases, slowing to 1.3% from 3.1% in the previous month.

However, the BRC warned in its report that many households were not feeling the benefit of lower inflation, adding that there was a risk that price increases would accelerate again.

BRC chief executive Helen Dickinson said progress in curbing price rises was likely to be hampered by other cost pressures, including the implementation of the National Living Wage hike and the April corporate tax rate hike.

“Rising geopolitical tensions will also increase supply chain uncertainty and costs. With a general election coming up later this year, we hope that political parties will continue to move beyond their current trajectories to the country as a whole. We want them to outline how they will help unlock investment.’ Quite the contrary,” Ms Dickinson said.

Separate data from research firm Kantar showed food price inflation slowed in January as fewer people bought promotional items than in December.

According to the report, around 86 million more boxed lunches will be brought into the workplace in 2023 as people demand tighter budget control.

Fraser McKevitt, head of retail and consumer insights at Kantar, said: “Spending on alcohol has fallen by more than half compared to December as consumers across the country enter Dry January.” Ta.

Almost 6% of beer packs sold in January were non-alcoholic or low-alcohol options, up from 4% at the end of last year. With the launch of Veganuary, sales of private-label plant-based products increased 8% from the same month, Kanter said.

Several shipping companies have stopped vessels using the route following attacks by Yemeni Houthi rebels. Last week, the US and UK launched a military offensive against the Houthis.

But Mr McKevitt said: “While there has been much speculation about the impact of the Red Sea shipping crisis on commodity prices, the buzz on grocery store aisles this January is rather the best value. “This is about a dispute between supermarkets for Rather than geopolitics.

“Retailers have pulled back on promotions a bit in the new year, which means inflation is not coming down as quickly,” he said.

He added that all eyes will now be on Valentine's Day to see if couples will again opt for more low-key celebrations, as they did in 2023.

However, although tobacco and alcohol prices remain high, utility bills are expected to fall in 2024, potentially pushing headline inflation closer to the Bank of England's 2% target. There is some hope that there will be.

Expectations of lower inflation have raised expectations that the central bank will cut its key interest rate, which is currently at a 15-year high.

The central bank has raised interest rates 14 times since December 2021 to tackle the inflation that has weighed on British household finances over the past two years.

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