Retailers in ‘stiff competition’ drives shop prices down

Shop price deflation was 0.1% in July, the second consecutive month of deflation since October last year. This was below the 12- and six-month average price increases of 0.3% and 0.4% respectively.

Fresh-food inflation slowed during the month to 1.2% from 1.4% in June, and food inflation eased to 1.7% in July from 1.8% the previous month, according to the BRC Nielsen Shop Price Index.

Ambient food price growth increased from 2.3% in June to 2.4% in July, but non-food prices fell 1.2%, the same rate of decrease as in June.

Out of the non-food categories, shop prices inflated for three and deflated for three. As consumer confidence remained low, retailers continued to compete using discounts to attract shoppers.

BRC chief executive Helen Dickinson said: “Many consumers will be pleased to see the price of non-food products continuing to fall at a steady rate, underlining the stiff competition between retailers that is driving down prices. Furthermore, food price inflation eased slightly, in part due to the fall in global food prices.

“While we expect food inflation to remain steady over the next few months as retailers work hard to keep prices low, this will depend on whether the UK can navigate an agreement with the EU to ensure frictionless tariff-free trade continues after October 31.”

Nielsen head of retailer and business insight Mike Watkins said: “With so much economic uncertainty, it’s good news for shoppers that there was no pressure coming from shop price inflation during July.

“Looking ahead for the next few months, we anticipate broadly stable food inflation and non-food retailers looking to keep any price increase to a minimum, as shoppers continue to be cautious around their retail spend.”