The price rises in shops have slowed to their lowest rates since last October, which has been helped by the cost of fresh food increasing less rapidly.
Prices rose 6.9 percent in the year to August, down from 7.6 percent in July, the British Retail Consortium (BRC) has reported.
The numbers are below the three-month average rate of 7.7 percent and the lowest since October 2022.
Food inflation is at its lowest since September last year, the BRC said. Food prices decelerated to 11.5 percent in August, compared to 13.4 percent in July.
The slowdown in prices growth has been attributed to falling food inflation, particularly for products such as meat, potatoes and some cooking oils.
Consumers saw further reduction in prices for fresh food in August, down to 11.6 percent from 14.3 percent in July.
Inflation in ambient foods, which have a longer shelf life, dropped to 11.3 percent in August, down from 12.3 percent last month.
“These figures would have been lower still had the government not increased alcohol duties earlier this month,” said chief executive of BRC, Helen Dickinson.
A new alcohol duty system was implemented on Aug. 1, with the new system taxing all alcoholic drinks based on their alcohol by volume. This replaced the old way, which was based on four separate taxes covering beer, cider, spirits, wine and made-wine.
Meanwhile, non-food inflation remained unchanged at 4.7 percent in August, staying below the 3-month average rate of 5.0 percent.
“Across non-food categories, toiletries and cosmetics saw price growth ease as many key components became cheaper, meanwhile inflation for clothing and footwear increased as retailers unwound their extensive summer sales,” Ms. Dickinson said.
This year’s summer weather, which saw heavy rainfalls in the UK, has affected the consumers’ buying habits. The “dampened” demand pushed some high street retailers to increase promotions and food retailers to continue slashing prices, said Mike Watkins of consumer intelligence company NielsenIQ.
UK consumers showed signs of growing confidence in how they viewed their finances and the wider economy in the past and next 12 months. This was revealed by a GfK Consumer Confidence Barometer in August.
Nevertheless, the GfK tracker, which recorded a rise in consumer mood in August, still showed the headline figure to be “strongly negative at -25.”
The slowdown in food price increases may be hailed as good news for consumers. However, it comes in contrast with some of the highest food inflation rates in the past years.
The food and non-alcoholic beverages annual inflation rate in July was 14.9 percent, compared to 1.5 percent in July 2019.
The consumer prices index including owner occupiers’ housing costs (CPIH) stood at 6.4 percent in July, compared to two percent in July 2019.
While the trajectory of in price reduction is moving in the right direction, the majority of British consumers are worried about rising grocery prices. High grocery shopping bills dictate what and how people eat, analytics company Kantar has reported.
Britons opt for the cheapest value product ranges and choose to cook meals with fewer ingredients.
Chancellor Jeremy Hunt recognised that families and businesses across the country are “hurting,” as he listed the reasons for high inflation on X, formerly known as Twitter.
These included a supply chain shock in the aftermath of the pandemic, as well as the war in Ukraine leading to spikes in price of wheat and the surge in energy prices. High gas prices ultimately feed through to high food prices, the chancellor added.
The latest ONS figures showed that in July the inflation fell to 6.8 percent, from 7.9 percent a month earlier. Even as inflation decelerates, British consumers will remain cautious about discretionary spending, a NielsenIQ survey showed.
Sixty percent of households expect to be severely or moderately impacted by rising household costs in the coming months, the survey revealed.