Shop prices continued to fall last month as retailers ran more promotions in an effort to encourage cautious consumers to spend.
The latest BRC and Nielsen figures showed overall shop prices were down 1.6% in August compared to a decrease of 1.3% in July.
Non-Food prices slid 3.4% compared to a fall of 2.9% the previous month.
Meanwhile, food inflation eased from 1.5% to 1.3%. This was driven by fresh food inflation slowing from 0.9% to just 0.2% amid increased availability of seasonal produce. Ambient food inflation accelerated to 2.8% last month, up from 2.3% in July.
BRC Chief Executive Helen Dickinson stated that consumers will welcome another month of falling prices in shops but warned that rises could be on the way.
“These lower prices are already under threat from increased costs associated with implementing coronavirus safety measures and are certain to rise if the UK ends the transition period without a trade deal with the EU,” she said.
“The absence of a tariff-free deal will lead to higher prices for consumers as thin retail margins force retailers to raise prices in response to higher import costs. Furthermore, without a deal that reduces checks and red tape, the UK supply chain faces severe disruption, reducing the availability of goods and further raising prices for consumers.”
Meanwhile, Nielsen’s Head of Retailer & Business Insight Mike Watkins noted that supermarket sales got a boost as many families turned to stay-cations this summer.
“With millions of families choosing to holiday in the UK this summer, supermarket sales remain buoyant with sales of fresh foods showing an uptick, helped by hot weather earlier in the month and slowing inflation as seasonal produce becomes available. This has offset some of the increases in ambient food and drink. However, deflation continues in much of non-food with retailers still unsure about the levels of demand for next seasons’ ranges.”
NAM Implications:
- Behold the arrival of the super-savvy consumer…
- …prepared to search for good value, on and offline.
