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UK shop price data eases BoE pressure as business mood sours
UK shop price inflation held at 1.2% in June, below forecasts, as food costs eased. Lloyds business confidence fell for third month, with manufacturing confidence sliding 10 points.
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British shop price inflation held steady at 1.2% in June, unchanged from May and below consensus forecasts, the British Retail Consortium reported Tuesday. Food price inflation eased to 2.4%, its lowest since March 2025, down from 2.7% in May. Fresh food prices rose 2.8% year-on-year, a meaningful deceleration from 3.4% in May. Retailers flagged summer promotions on ice cream and chilled products during a spell of hot weather. Non-food prices edged up 0.6% annually versus 0.5% in May. Discounting on clothing and footwear ahead of the summer season was insufficient to pull the overall reading lower.
The BRC measure covers a narrower range of goods than the official consumer price index, which held at a 13-month low of 2.8% in May. The two series are broadly consistent in signalling a gradual easing of price pressures at the consumer level. The softer-than-expected print provides modest comfort to Bank of England rate-setters looking for evidence that consumer price pressures are easing. The data covers a narrower basket than CPI. It is unlikely to move the needle materially on rate expectations alone.
BRC Chief Executive Helen Dickinson said competitive pressure is containing inflation at the consumer level for now. Retailers are absorbing a growing stack of cost increases. Those include higher National Insurance contributions, a new triple packaging tax, and elevated input costs driven by extreme weather and the ongoing geopolitical disruption from the Iran conflict. Those pressures will not remain invisible to the consumer indefinitely, she said.
A separate survey from Lloyds Bank pointed to more uneven conditions across the business community. Overall business confidence fell 3 points to +44 in June, slipping below its 12-month average of +47, according to online polling of 1,200 firms conducted by Ipsos between June 1 and June 15. Confidence in the broader economic outlook fell more sharply, dropping 4 points to +31 against a 12-month average of +38.