Upcoming UK Government Set to Gain from Declining Inflation and Fuel Prices

Britain’s upcoming government is set to gain from a reduction in household financial pressure due to a slowdown in inflation and a decrease in fuel prices, although costs remain high for many families.

Data from the British Retail Consortium (BRC) indicates that annual UK shop price inflation dropped to 0.2% last month from 0.6% in May, the slowest rate since October 2021, as retailers lowered prices on key products like butter and coffee.

Ahead of Thursday’s general election, separate figures from the RAC reveal that petrol and diesel prices fell for the second consecutive month in June, offering some relief to families grappling with the cost of living crisis. However, the RAC noted that fuel prices remain “too expensive” in England, Wales, and Scotland.

The RAC’s monthly fuel watch reported that the average price of petrol in the UK at the end of June was just under 145p per litre, down from 148p at the beginning of the month. Diesel prices decreased from nearly 154p to about 150p.

“Fuel prices are still nowhere near where they should be despite falling for the second consecutive month,” the RAC stated. It pointed out that fuel costs are lower in Northern Ireland, with petrol being 4.5p cheaper per litre on average and diesel 8p cheaper than in the rest of the UK.

Simon Williams, the RAC’s head of policy, said: “While it’s good news that prices at the pumps have fallen for the second month in a row, it also leaves a bad taste because drivers in Great Britain are still paying much more than those in Northern Ireland.”

Williams highlighted that Shell and BP owned forecourts were the most expensive, referencing Competition and Markets Authority data showing Shell-owned sites as the priciest in the UK. “We remain baffled how the same fuel can be sold at vastly different prices by the biggest retailers, whether supermarkets or the world’s largest oil companies,” he added.

Rishi Sunak has made lowering inflation a key focus of the Conservatives’ general election campaign, following the official headline rate dropping to the Bank of England’s 2% target in May from a peak of 11.1% in October 2022.

Shadow Chancellor Rachel Reeves, however, emphasized that household financial pressure remains “acute” as average prices are still significantly higher than before the cost of living crisis.

According to the latest update from the BRC, food inflation slowed to 2.5% in June, down from 3.2% in May, marking the 14th consecutive month of deceleration in grocery price growth. This indicates that while average prices in UK shops are still rising, they are doing so at a slower rate than in previous months.

Helen Dickinson, the chief executive of the BRC, noted that retailers have reduced the prices of essential items such as butter and coffee. Non-food prices also showed deflation, meaning average prices are lower compared to a year ago, as shops aimed to increase sales by offering discounts.

“This trend was particularly noticeable for TVs, with attractive deals aimed at capitalizing on the excitement of the Euros,” she said. “The winner of Thursday’s election will benefit from the efforts of retailers to lower costs and prices, helping to ease the cost of living for millions of households”.


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