UK retail prices continue to fall

Shop price deflation accelerated to 1.2 per cent year-on-year in July, compared to the previous month’s decline of 0.7 per cent.

But this was a slower rate of decline than the 12 and six month average price decreases of 1.6 per cent and 1.4 per cent respectively, according to figures from the British Retail Consortium (BRC.)

Non-Food deflation accelerated to 1.8 per cent this month, compared to a fall of 1 per cent in June. Once again representing a slower rate of decline than the 12-month and six-month average price declines of 2.8 per cent and 2.2 per cent respectively.

Food deflation accelerated to 0.4 per cent in July from June’s deflation of 0.2 per cent, the fourth consecutive month when food prices fell.

Fresh Food prices fell for the eighth consecutive month in July, with deflation accelerating to 1 per cent in July from 0.7 per cent last month.

Ambient Food inflation eased to 0.5 per cent in July, down from 0.6 per cent in June. This is the lowest rate of inflation for the category since January 2017.

“UK consumers will be pleased to see another month of falling prices at the checkout,” said Helen Dickinson, chief executive, British Retail Consortium (BRC.) “Annual prices in July fell at a faster rate than the previous month due to fierce competition between supermarkets keeping food prices low, and the steeper fall in non-food prices.”

Dickinson added: “With the reopening of some holiday destinations and other recreational activities, consumers broadened their spending to include more leisure and travel. In response, non-food retailers, particular fashion businesses, have been working hard to keep consumer appetite alive with summer sales.”

But the chief exec warned low prices may not last forever, especially with retailers facing cost pressures due to rising shipping, haulage, and petrol prices, as well as frictions from leaving the EU. She said that the additional paperwork and physical checks on EU imports in October and January may push prices up in the long-term.

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