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Retail relief as products drop in price alongside easing inflation in boost to shoppers | Personal Finance | Finance

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Shop prices are effectively at a standstill with many products now cheaper than a year ago, according to new industry figures.

The prices of non-food items are down by one percent in June on the same month last year.

At the same time food price inflation – the rate of annual increase – has fallen from 3.2 percent in May to 2.5 percent in June, which is the lowest level for three years.

The net effect is that total shop price inflation is running at just 0.2 percent, according to figures from the British Retail Consortium.

The increase in shop prices is running behind the average rise of six percent in wages, which means people will have more money in their pocket at the end of the week.

The positive news follows a reduction in the energy price cap this week, which will make the cost of turning on the lights or having a hot shower cheaper through the summer.

The figures will be seized on by the Conservatives to claim the UK economy has turned a corner ahead of the general election on Thursday.

Chief executive of the BRC, Helen Dickinson, said: “During the height of the cost of living crisis, retailers invested heavily in improving their operations and supply chains to compensate for the impact of global shocks on input costs.

“This is clearly paying off, with shop prices having risen just 0.2 percent over the past 12 months.

“Food inflation is now lower than any time since 2021 helped by falling prices for key products such as butter and coffee.

“Meanwhile, non-food prices went deeper into deflation as retailers tried to drive sales by discounting. This was particularly true for TVs with great deals to capitalise on the Euros fever.”

She added: “Whoever wins Thursday’s election will benefit from the work of retailers to cut their costs and prices, easing the cost of living for millions of households.

“The last few years should serve as a warning that where business costs rise significantly, consumer prices are forced up too.

“The next Government must address some of the major cost burdens weighing down the retail industry, including the broken business rates system, and inflexible apprenticeship levy.

“By doing so, retailers can invest in lower prices for the future – helping to reduce the cost of living pressures that many families face.”

Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, said: “Shop price inflation is still slowing and this will be of help to shoppers as they plan their household budgets for essential goods and services.”

Looking ahead, he said: “And with uncertainty around discretionary spending, we expect the intense competition across the marketplace to keep price increases as low as possible this summer.”

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