July’s shop price deflation held steady at 0.1 per cent, making it the second consecutive month of deflation since October 2018.

This is according to the latest British Retail Consortium (BRC) and Nielsen figures, which showed that food inflation eased slightly to 1.7 per cent in July from 1.8 per cent in June. Fresh food inflation also slowed in July to 1.2 per cent, from 1.4 per cent in June. Meanwhile, ambient food inflation accelerated to 2.4 per cent in July, from 2.3 per cent in June.

Non-food prices fell at by 1.2 per cent; the same rate of decrease as in June.

Similar to last month, July’s headline inflation figure was driven by the sharp decline in non-food prices. Out of the seven non-food index categories, inflation eased for three of them and other three were deflationary.

While technological developments have been contributing to the long-term decline of prices of electricals and clothing, low consumer confidence has kept shoppers from splashing out on discretionary items.

Given the competitive environment, retailers are, on average, using price discounts to attract customers.

BRC chief executive Helen Dickinson commented: “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.”

Mike Watkins, head of retailer and business insight at Nielsen, added: "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.”

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