Cheap TVs ahead of Euros help slow price inflation

Cheap TVs ahead of Euros help slow price inflation

Discounted TVs ahead of the Euros football tournament helped slow price rises in shops, according to a UK retail industry body.

Shop prices rose at an annual rate of 0.2% in June, down from 0.6% in the year to May according to the British Retail Consortium (BRC) and research firm NielsenIQ.

Price inflation also eased due to cheaper butter and coffee.

But although price rises have calmed to the lowest rate since October 2021, food and many goods are still more expensive than they were before the Covid pandemic and Russia's invasion of Ukraine, leaving many households budgets squeezed.

The price of non-food goods dropped by 1% in the year to June, a steeper fall than May's 0.8% decline.

Helen Dickinson, chief executive of the BRC, said retailers had offered deals on televisions to "capitalise on the Euros fever".

On food, inflation slowed to 2.5% in the year to June compared to 3.2% in May.

Researchers suggested that price rises will remain low as retailers remain conscious of tight household budgets.

"With uncertainty around discretionary spending, we expect the intense competition across the marketplace to keep price increases as low as possible this summer", said Mike Watson, head of retailer and business insight at NielsenIQ.

Recent official figures showed that headline inflation - which calculates the price rises of all things in the economy including food, services and travel - hit the Bank of England's target for the first time in almost three years.

Prices rose at 2% in the year to May, down from 2.3% the month before, although food prices overall are still significantly higher than at the beginning of 2022.

But there are warning signs that there is a bumpy road ahead.

The Middle East conflict continues to affect trading in the Red Sea, a popular shipping route, as Houthi rebels backing Hamas attack Western vessels, forcing firms to take longer and more expensive diversions. The consequences are that the higher logistics costs are passed on to consumers.

"The last few years should serve as a warning that where business costs rise significantly, consumer prices are forced up too", Mr Watkins said, urging whoever wins the elections on Thursday to address "some of the major cost burden weighing down the retail industry".