Despite numerous consumer goods manufacturers warning of growing cost pressures in recent months, latest data reveals that both food and non-prices in the UK fell this month as retailers battled for customers.
The BRC-Nielsen Shop Price Index shows overall deflation accelerated to 1.2% year-on-year in July compared to June’s decrease of 0.7%.
Food prices fell by 0.4%, accelerating from a 0.2% decline in the previous month as the Big 4 supermarket chains tried to compete with a resurgent Aldi and Lidl.
Meanwhile, non-food prices slid by 1.8% in July, following a 1% fall in June. With people broadening their spending to include more leisure and travel, the BRC highlighted that non-food retailers, particular fashion businesses, have been working hard to keep consumer appetite alive with summer sales.
However, the low prices are not expected to last much longer. “Recently, retailers have faced huge cost pressures as a result of rising costs of shipping, haulage and petrol as well as frictions from exiting the EU,” said BRC Chief Executive Helen Dickinson.
“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.”
Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, added: “It’s an uncertain time for many households as the economy slowly reopens and recent NielsenIQ research shows 41% of all shoppers are watching their spend more than they did before the pandemic.
“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.”
