Average shop prices in the UK fell for the first time in almost three years this month as retailers discounted summer stock after poor weather early in the season hit sales.
The BRC-NielsenIQ Shop Price Index shows that prices fell by an annual rate of 0.3% in August, down from a 0.2% rise in July, marking the first deflation since October 2021.
Non-food remained in deflation at -1.5%, slipping further down from -0.9% in the preceding month, amid cuts in the cost of clothing and household goods.
Meanwhile, as supplier input costs lessened, food inflation slowed to 2.0% in August, down from 2.3% in July and the lowest rate since November 2021. Fresh food inflation eased to 1.0% from 1.4%, while ambient food inflation decelerated to 3.4%, down from 3.6%.
BRC Chief Executive Helen Dickinson commented: “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.”
However, she noted that 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,” said Dickinson.
NAM Implications:
- Time to be thankful for small, very small mercies…
- …as suppliers and retailers slowly rebuild consumer trust.
- The key is to get the basics right in terms of a realistic view of relative competitiveness.
- And always more than it says on the tin, every time…
