Shop prices fell into deflation for the first time in nearly three years driven by non-food retailers discounting heavily to shift their summer stock, according to the British Retail Consortium.
The latest BRC-NielsenIQ Shop Price Index shows annual shop price deflation was at -0.3% in August, down from inflation of 0.2% in July.
This was below the three-month average rate of 0% and was at its lowest since October 2021.
Food inflation slowed to 2.0% in August, down from 2.3% in July. This was below the three-month average of 2% and the lowest since November 2021.
Fresh Food inflation slowed to 1.0% in August, down from 1.4% the previous month.
Meanwhile, ambient food dropped to 3.4% in August compared with 3.6% in July. This was below the three-month average of 3.7%.
Non-food remained in deflation at -1.5% in August, down from -0.9% in July. This is below the three-month average rate of -1.1%
BRC chief executive Helen Dickinson said: “Shop prices fell into deflation for the first time in nearly three years. This was driven by non-food deflation, with retailers discounting heavily to shift their summer stock, particularly for fashion and household goods. This discounting followed a difficult summer of trading caused by poor weather and the continued cost of living crunch impacting many families. Food inflation eased with fresh food prices, especially fruit, meat and fish, seeing the biggest monthly decrease since December 2020 as supplier input costs lessened.
“Retailers will continue to work hard to keep prices down, and households will be happy to see that prices of some goods have fallen into deflation. The outlook for commodity prices remains uncertain due to the impact of climate change on harvests domestically and globally, as well as rising geopolitical tensions. As a result, we could see renewed inflationary pressures over the next year.”
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