UK shop price deflation eases to 0.7% in January 2025

Posted by author January 28, 2025 Shopping

Food inflation in the UK dropped to 1.6% in January 2025. Credit: Ivan Marc/Shutterstock.

UK shop price deflation has eased to 0.7% in January 2025, improving on the 1% deflation recorded in December 2024, according to the latest British Retail Consortium (BRC) – NielsenIQ shop price index.

This figure is slightly better than the three-month average deflation rate of -0.8%.

During the month, deflation in the non-food segment registered at -1.8%, improving from the deflation of -2.4% in the previous month and just above the three-month average rate of -2%.

Food inflation showed signs of deceleration, coming in at 1.6% in January, down from 1.8% in December and falling short of the three-month average rate of 1.8%.

Within the food segment, fresh food inflation slowed to 0.9% in January from 1.2% in December and is marginally below the three-month average rate of 1.1%.

Ambient food inflation dropped to 2.5% – its lowest point since February 2022.

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The figure is down from 2.8% in December and is behind the three-month average rate of 2.7%.

BRC chief executive Helen Dickinson stated: “While overall prices fell in January, the pace of shop price deflation eased. Extensive January sales were good news for bargain hunters, with non-food products showing significant discounts, particularly for furniture and fashion, but less good news for retailers needing to shift excess stock. This month’s figures also showed early signs of what is to come, with month-on-month food prices rising at their fastest pace since April last year. Ambient food saw a 1% jump as prices spiked for sugary products, chocolates and alcohol.

“Price cuts and deflation may not last much longer as retailers will soon feel the full impact of £7bn of new costs announced at the last Budget. Higher employer NICs [National Insurance rates and categories], [an] increased National Living Wage, and a new packaging levy mean that prices are expected to rise across the board. Government can help to mitigate the impact on consumers by ensuring its proposed reforms to business rates do not result in any store paying more in rates than they already do. Without action, UK households will feel the effects.”