The next UK government stands to gain from a significant easing in inflation and a drop in fuel prices. Recent data reveals a slowing in shop price inflation and a decline in fuel costs. This comes as a welcome relief to many households still grappling with the cost of living crisis.
Shop price inflation slowed to 0.2%, and petrol prices dropped for the second consecutive month. However, many families continue to find costs ‘too expensive’. The British Retail Consortium (BRC) reported that annual UK shop price inflation has cooled, offering some respite to consumers.
Slowing Inflation and Shop Prices
Britain’s next government is set to benefit from reduced pressure on household finances following a slowdown in shop inflation and a drop in fuel prices. The British Retail Consortium (BRC) reported that annual UK shop price inflation cooled to 0.2% last month, down from 0.6% in May.
Retailers have taken steps to reduce prices on key products such as butter and coffee. This decrease marks the slowest pace of inflation since October 2021, providing much-needed relief to families affected by the ongoing cost of living crisis.
Fuel Prices Decline
Separate figures from the RAC show that petrol and diesel prices fell for the second month in a row in June. This decline offers some relief to families impacted by high fuel costs.
The average price of petrol in the UK at the end of June was just under 145p a litre, down from 148p at the start of the month. Diesel prices also dropped from nearly 154p to about 150p.
Fuel prices in Northern Ireland were notably lower, with petrol averaging 4.5p a litre cheaper and diesel 8p cheaper than in the rest of the UK. However, filling up at the forecourt remains ‘too expensive’ in England, Wales, and Scotland.
RAC’s Perspective on Fuel Prices
Simon Williams, the RAC’s head of policy, commented: ‘While it’s good news that prices at the pumps have fallen for the second month in a row, this also leaves a bad taste in the mouth because we know drivers in Great Britain are continuing to get a raw deal.’
Williams pointed out that forecourts owned by Shell and BP were among the most expensive, based on data from the Competition and Markets Authority. He expressed confusion over why the same fuel is sold at vastly different prices by major retailers.
Despite the drop, fuel costs in Great Britain are still significantly higher than in Northern Ireland, causing frustration among drivers.
Government’s Stance on Inflation
Rishi Sunak has made lower inflation a key point in the Conservatives’ general election campaign. He highlighted the official headline rate’s return to the Bank of England’s 2% target in May, down from a peak of 11.1% in October 2022.
However, shadow chancellor Rachel Reeves noted that household finances remain under significant pressure. Average prices are still much higher than before the cost of living crisis began.
Retailers’ Efforts to Cut Costs
The latest BRC snapshot shows that food inflation slowed to 2.5% in June, down from 3.2% in May. This marks the 14th consecutive deceleration in annual grocery price growth.
Despite the slowdown, average prices in UK shops continue to rise, though at a slower pace. BRC chief executive Helen Dickinson stated that retailers have cut prices on some key products, including butter and coffee.
Non-food prices are also experiencing deflation as shops offer discounts to boost sales. There are particularly good deals on TVs, capitalising on Euros fever.
Election and Economic Outlook
‘Whoever wins Thursday’s election will benefit from the work of retailers to cut their costs and prices, easing the cost of living for millions of households,’ Dickinson said.
The easing of inflation and fuel prices presents a significant advantage for the incoming government. However, challenges remain as many families still struggle with high living costs.
In summary, the next UK government is poised to benefit from the recent easing in inflation and fuel prices. These developments provide some relief to households, though challenges persist.
The efforts by retailers to reduce prices and the decline in fuel costs are positive signs. However, the overall cost of living remains a critical issue for many families.