UK shop prices fall for first time in almost three years
New data has shown that UK shop prices have fallen for the first time since the beginning of the cost of living crisis almost three years ago.
According to the British Retail Consortium-NielsenIQ shop price index, deflation stood at 0.3% in the first week in August, down from inflation of 0.2% in July, as retailers offered big discounts on unsold summer stock. This meant that shop price annual growth was at its lowest rate since October 2021.
While non-food remained in deflation at -1.5%, down from -0.9% in the previous month, food inflation slowed to 2% from 2.3% in July.
Helen Dickinson, chief executive of the BRC, 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.”
Meanwhile, fresh food inflation saw the biggest monthly decrease since December 2020 with a slowing to 1% from 1.4% in July.
Dickinson added: “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.”
