Return to Insights

Shop Price Inflation Falls But Retail Sector Remains Under Pressure

Fall in BRC's shop price index, 6,000 UK retail outlets lost, 2023 HSBC earnings, and rate held by RBA.

BRC’s Shop Price Index Falls But Concerns Remain

This morning has seen the British Retail Consortium’s Shop Price Index fall for the fourth consecutive month, raising hopes that inflationary pressures are continuing to ease. This came as the index decreased from 8.4% in June, to 7.6% in June on an annualised basis, while prices fell 10bps on a month-on-month basis.

Regarding the food price index, the BRC citied easing wholesale costs and improved supply chains as a driver behind why it slipped from 14.6% in June to 13.4% in July. As such, food price inflation has fallen to its lowest level in a year. However, here, the BRC’s CEO described how “we expect some global commodity prices to rise again as a result, and food prices will be slower to fall.” As we looked at last week grain prices continued to climb last month following another Russian attack on one of Ukraine’s largest ports on the Danube, rising supply-side concerns. Over July, we saw Russia scale up their activity in the Black Sea following its decision to pull out of an agreement that allowed safe passage of crops by sea out of the Ukraine. These come as the impact of heat waves across Europe and North America has put further inflationary pressure on wheat futures.


UK Loses 6,000 Retail Outlets in Five Years

The BRC are also writing that 6,000 retail outlets have been closed in the UK in the past five years. This has come as the country grappled with a pandemic, decades high levels of inflation, and tight monetary and fiscal conditions. As such, the vacancy rate has risen from 13.8% in Q1 2023 to 13.9% in Q2. Retail property vacancies were most acute in shopping centres where vacancies are at 17.8%, as consumers across the country put more volume through online shopping and mail-order services. This also comes as many consumers cut down on discretionary spending, given the rising cost of living and stretched household finances.

In response, the BRC’s CEO stated that the business rate system should be reviewed in order to inject some health back into Britian’s retail sector. According to Helen Dickinson, the industry will be subjected to a further £400m tax bill next April which will detract away from investment and growth.

HSBC H1 2023 Earnings

This morning has seen markets react to HSBC’s H1 2023 earnings which surpassed expectations. With a balance sheet total of €2.681 trillion (at the end of 2022), HSBC is the largest bank in Europe (based on assets) and its pre-tax profit for the first six months of the year has come in at $21.7bn against a consensus of $20.9b. This marks a profit which is more than double their pre-tax profit for H1 2021 as the bank benefits from a rising net interest income (which increased from 1.69% in Q1 to 1.72% in Q2). This comes as the bank have announced a $2bn share buyback scheme and the Bank’s CEO Noel Quinn stated that “there was good broad-based profit generation around the world, higher revenue in our global businesses driven by strong net interest income, and continued tight cost control”.

RBA Hold Rates

This morning has seen the RBA hold rates at 4.1%, against market expectations of a 25bps increase and marking the second consecutive rate pause. Last week we saw Australian headline inflation (annualised) has easing to 6% over Q2, slipping one percentage point from Q1 and coming in softer than expectations of 6.2%. According to the RBA, headline inflation is projected to slow their 2-3% target by mid-2025, though the CB reiterated that inflation was still too high and that further monetary tightening may be required further down the line.


If you would like a PDF of this commentary, please contact us and we'll be in touch.

Contact us


Find out how we have helped our clients meet their hedging requirements.

Monday Rundown

Macro Monday, expectations set on future tax cuts, unwelcome opposition for Labour after Galloways Rochdale by-election win, ceasefire talks stalled, Russians intercept German air force video conference, talk of issues and downgrades of US regional banks, and looking ahead to this weeks data calendar.

WTFX: Issue 10

In this month’s WTFX we look at the Space Renaissance and the extent to which the UK is making inroads into outer space...

Morning Round-Up

Friday Feeling, Labour majority overturned by Workers Party of Britain in Rochdale by-election, PCE index for the US comes in line with expectations, prices rose by more than expected in the Nationwide House Price Index, and growing GDP for Canada.

EC Considers Using Funds from Frozen Russian Assets to Arm Ukraine

Thought for Thursday, president of EC proposes the use of funding from frozen Russian assets to arm Ukraine, disquiet between Poland and Ukraine as Polish prime minister considers closing borders, and this afternoons US data release.

G20 and Michigan Primary in Focus

Word of the week Wednesday, G20 reconvene in Sao Paulo, Democrat and Republican primary elections in Michigan last night, and preparations for the Gaganyaan space mission sees four Air Force pilots shortlisted.

Hungarian National Assembly Approves Sweden’s Nato Bid

Travel Tuesday, motion supported by Hungarian parliament to allow Sweden to join Nato, Trump's legal bill continues to grow interest with US monetary conditions at their tightest level in 22 years, and today's data.

Red Sea Disruption

Macro Monday, report from the BCC on the impact on British businesses from Red Sea disruption, Ukraine president announces number of deaths since the Russian full-scale invasion, and data releases today.

Two Years Later

Friday feeling, what's happened in the last two years of the Russia-Ukraine conflict, and more hawkish views from the Fed.

Find out more about our foreign exchange solutions
Contact us