In February, shop price inflation showed unexpected restraint, remaining unchanged from January at a 0.7% decrease year-on-year, according to BRC and NielsenIQ data. Non-food prices dropped 2.1%, while food inflation rose to 2.1% due to global cost pressures. The Bank of England remains cautious on monetary policy despite anticipated rate cuts. Helen Dickinson noted that, while prices increased month-to-month due to post-sale adjustments, heavy retailer discounting in categories like fashion continues as demand weakens. Concerns loom over potential inflation from upcoming tax pressures this year, particularly affecting food prices.
Inflationary pressures could intensify as the year progresses, with planned tax and cost increases affecting retail budgets and driving food prices up significantly.
Despite recent price rises, retailers continue to offer heavy discounts in non-food sectors like fashion, furniture and electricals to attract shoppers amidst weaker demand.
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