The British Retail Consortium (BRC) – NielsenIQ shop price index data for February 2025 has shown a notable persistence of deflation within retail shop prices.
However, the month also saw the most significant monthly price surge in a year.
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Shop price deflation remained stable at 0.7% on an annual basis, mirroring the decrease seen in January and exceeding three-month average deflation of 0.8%.
BRC chief executive Helen Dickinson said: “While shop prices remained in deflation in February, prices on the month saw the biggest increase in the last year. Breakfast, in particular, got more expensive as butter, cheese, eggs, bread and cereals all saw price hikes. Climbing global coffee prices could threaten to push the morning costs higher in the coming months.”
Food inflation experienced an uptick, reaching 2.1% year-on-year in February – a jump from the 1.6% increase observed in January and higher than the three-month average inflation rate of 1.8%.
Unpacking food inflation further, fresh food prices saw a year-on-year rise of 1.5% in February, up from January’s 0.9% increase and exceeding the three-month average of 1.2%.
Ambient food products witnessed a more significant inflation rate of 2.8% compared to the same month pf 2024, escalating from the 2.5% rise seen in January and surpassing the three-month average of 2.7%.
In the non-food category, deflation decelerated slightly to 2.1% compared to the previous year, a slight drop from the 1.8% decrease recorded in January and aligning with the three-month average.
Dickinson added: “In non-food, month on month prices rose as January sales promotions ended, especially in electricals and furniture. But discounting is still widespread in fashion as retailers tried to entice customers against a backdrop of weak demand.
“Inflation will likely rise across the board as the year progresses with geopolitical tensions running high and the imminent £7bn increase in costs from the Autumn Budget and the new poorly designed packaging levy arriving on the doorsteps of retailers. We expect food prices to be over 4% up by the second half of the year.
“If government wants to keep inflation at bay, enable retailers to focus on growth and help households, it must mitigate the swathe of costs facing the industry. It can start by ensuring no shop ends up paying more than they already do under the new business rates proposals, and delaying the new packaging taxes.”
