Prices drop in first week of January but deflation eases

The first week of January showed “early signs of what is to come” in the way of shop prices, chief executive of the British Retail Consortium (BRC), Helen Dickinson, said in the organisation’s latest report.

For the period 1 to 7 January, 2025, shop price deflation was at 0.7 percent, above deflation of 1 percent in the previous month and slightly above the three-month average rate of -0.8 percent.

While food inflation eased to 1.6 percent, non-food remained in deflation at -1.8 percent, yet edged up from -2.4 percent in the month prior. This was also slightly higher than the three-month average rate of -2.0 percent.

In her comments, Dickinson said that while “overall prices fell in January, the pace of shop price deflation eased”, meaning that the month was “good news for bargain hunters” but “less good news for retailers needing to shift stock”.

She continued: “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.”

With Labour’s new Budget set to take effect in April, the BRC continued to express concern at the incoming “impact of seven billion pounds of new costs”, with Dickinson calling on the government to ensure that proposed reforms to business rates “do not result in any store paying more in rates than they already do”.