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Shop prices have continued to decline in July, but the lowering of prices may “not last forever” in the wake of Brexit, according to the latest BRC-Nielsen Shop Price Index.
Shop price deflation accelerated to 1.2% year-on-year over the month, compared to June’s decrease of 0.7%.
According to the BRC, this is a slower rate of decline than the 12- and 6-month average price decreases of 1.6% and 1.4%, respectively.
It said that annual prices in July fell at a faster rate compared to the previous month, however, largely driven by “fierce competition” between supermarkets keeping food prices low, alongside a larger decline in non-food prices.
Helen Dickinson, CEO, British Retail Consortium, said: “UK consumers will be pleased to see another month of falling prices at the checkout. With the reopening of some holiday destinations and other recreational activities, consumers broadened their spending to include more leisure and travel.
“In response, non-food retailers, particular fashion businesses, have been working hard to keep consumer appetite alive with summer sales.”
Nonetheless, she warned that low prices may “not last forever”, as retailers face “huge” cost pressures as a result of rising costs of shipping, haulage and petrol, as well as “frictions” from exiting the EU.
She added that the additional paperwork and physical checks on EU imports in October and January may “push prices up in the long-term”, noting that the 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: “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.”
