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August Shop Prices fell by 0.4% compared to a 0.1% decrease in July attributed to “weak consumer spending” and “stiff competition, according to latest BRC-Nielsen Shop Price Index.
This is below the 12 and six-month average price increases, both of 0.3%, and is the fastest rate of decline since June 2018.
The index also found that non-food prices fell by 1.5% in August compared to July’s decrease of 1.2%. This is again below the 12- and six-month average price declines of 0.6 and 0.7%, respectively. It is the fastest rate of decline since June 2018.
Food inflation eased slightly to 1.6% in August from 1.7% in July. This is below the 12- and 6-month average price increases of 1.8% and 1.9%, respectively.
The BRC also revealed that overall prices were pushed further into deflationary territory by non-food goods that saw prices decline at a faster pace in August. Out of the seven non-food categories, three were deflationary.
Inflationary pressures were also found be receding for some food categories. Promotional activity by supermarkets slowed down the rate of price increases for non-alcoholic beverages, sugar and confectionary and bread and cereals.
Additionally, the prices of some fresh goods declined in response to market developments. For instance, meat prices fell for a fourth consecutive month in August, as declines in global meat prices late last year have been feeding through into final consumer prices.
Helen Dickinson, chief executive of the BRC, said: “Consumers were the real winners this month as prices fell at their fastest rate in over a year. Prices of non-food goods fell at a faster rate than both the previous month and the 12-month average, while food inflation eased slightly due to higher levels of discounting from supermarkets.
“Weak consumer spending and stiff competition has kept prices down in the UK, however a disruptive no-deal Brexit, which would raise the cost of imported goods, could reverse this trend. In the interests of both consumers and retailers, the Government must redouble its efforts to find a workable agreement with the EU that would avoid a no deal scenario.”
Mike Watkins, head of retailer and business insight at Nielsen, added: “August is often a difficult month for retailers made more challenging this year by unseasonable weather early in the month, and we have seen the return of vouchering by many supermarkets and some non-food retailers bringing forward end of season discounts to help drive sales.
“Consumers remain uncertain about when and where to spend but the good news is that any inflationary cost pressures that may be building in the food supply chain, have not yet reached shop prices.”
