Shop price deflation accelerated to 1.2 per cent year-on-year in July compared to June’s decrease of 0.7 per cent, latest data from the BRC has shown.
This is a slower rate of decline than the 12- and 6-month average price decreases of 1.6 per cent and 1.4 per cent, respectively.
“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,” Helen Dickinson, chief executive of the British Retail Consortium (BRC).
“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.”
Dickinson, however, cautioned that low prices may not last long, as retailers are facing huge cost pressures as a result of rising costs of shipping, haulage and petrol as well as frictions from exiting the EU.
“The additional paperwork and physical checks on EU imports in October and January may push prices up in the long-term. Government should do all it can to minimise the impact on consumers by reducing any further frictions and costly delays where it can,” she said.
But, Mike Watkins, head of retailer and business insight at NielsenIQ, noted that retailer may have an imperative to keep prices low.
“It’s an uncertain time for many households as the economy slowly reopens and recent NielsenIQ research shows 41 per cent of all shoppers are watching their spend more than they did before the pandemic,” he said.
“So, it’s important that retailers continue to keep prices low especially as the increase in CPI is likely to lead to different shopping behaviours to help pay for the other increases in household spend.”
