

Market Analysis
Prices in British shops rose at the slowest pace in almost three years last month, according to industry figures, indicating a cooling of inflation. However, Prime Minister Rishi Sunak is unlikely to reap significant political benefits in the upcoming national election this week.
The British Retail Consortium reported on Tuesday that annual shop price inflation slowed to 0.2% in June from 0.6% in May, marking the smallest increase since October 2021.
Prices for non-food items decreased by 1.0% annually after a 0.8% drop in May, thanks to promotions on TV sets timed with the Euro 2024 soccer tournament. Food inflation also eased for the 14th consecutive month, dropping to 2.5% from 3.2%.
"This will be helpful to shoppers as they plan their household budgets for essential goods and services," said Mike Watson, head of retailer and business insight at NielsenIQ, which provides data for the BRC. "With uncertainty around discretionary spending, we expect intense market competition to keep price increases minimal this summer."
Sunak has attempted to take credit for the reduction in headline inflation, which peaked at over 11% in 2022 and returned to the Bank of England's 2% target in May. However, opinion polls indicate that his Conservative Party is poised to suffer significant losses to the opposition Labour Party in Thursday's election.
The Bank of England is evaluating whether price pressures have subsided enough to consider cutting interest rates for the first time since 2020. Nonetheless, with service sector inflation nearing 6%, the timing of any rate cut remains uncertain.
Investors currently estimate a roughly 60% chance that the Bank of England will lower the Bank Rate from 5.25% to 5.0% in August.
BRC Chief Executive Helen Dickinson noted that investment by retailers in improving operations and supply chains has helped limit price increases. She urged the next government to address cost burdens, such as the business rates tax on commercial properties and the apprenticeship levy, which employers find restrictive.
Paraphrasing text from "Reuters" all rights reserved by the original author.