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Monday 14 October 2019

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Payments Awards 2019

Weak spending hits shop prices in August

Written by Peter Walker
28/08/19

August Shop Prices fell by 0.4 per cent, compared to a 0.1 per cent decrease in July – the fastest rate of decline since last June.

This is according to the latest figures from the British Retail Consortium (BRC) and Nielsen, which also showed non-food prices down by 1.5 per cent in August, compared to July’s decrease of 1.2 per cent.

Food inflation eased slightly to 1.6 per cent in August from 1.7 per cent in July, while fresh food inflation accelerated in August to 1.4 per cent, from 1.2 per cent in July. Ambient food inflation slowed significantly to 1.8 per cent in August from 2.4 per cent in July.

Overall prices were pushed further into deflationary territory by non-food goods that saw prices decline at a faster pace in August. Out of the seven non-food categories, three were deflationary.

Weak consumer spending and intense competition kept price increases well at bay, with many retailers using discounts, especially for basic items. A case in point was that prices for five categories - DIY, furniture, clothing, electricals and other non-food - were below their August 2015 prices.

Inflationary pressures receded for some food categories too, as promotional activity by supermarkets slowed down the rate of price increases for non-alcoholic beverages, sugar and confectionary and bread and cereals.

Meanwhile prices of some fresh goods declined in response to market developments – for instance, meat prices fell for a fourth consecutive month in August, as declines in global meat prices late last year fed through into final consumer prices.

BRC chief executive Helen Dickinson said: “Weak consumer spending and stiff competition has kept prices down in the UK, however a disruptive no-deal Brexit, which would raise the cost of imported goods, could reverse this trend.

“In the interests of both consumers and retailers, the government must redouble its efforts to find a workable agreement with the EU that would avoid a no deal scenario.”

Mike Watkins, head of retailer and business insight at Nielsen, added: “August is often a difficult month for retailers made more challenging this year by unseasonable weather early in the month, and we have seen the return of vouchering by many supermarkets and some non-food retailers bringing forward end of season discounts to help drive sales.

“Consumers remain uncertain about when and where to spend but the good news is that any inflationary cost pressures that may be building in the food supply chain, have not yet reached shop prices.”


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