UK: Shop prices down for third month running during July, says BRC-Nielsen survey

Overall shop prices have fallen for the third month running during July, says the latest BRC-Nielsen

Overall shop prices have fallen for the third month running during July, says the latest BRC-Nielsen retail survey - Credit: PA

Overall prices showed annual deflation for the third consecutive month during July, according to a new report, with deflation accelerating to 0.5% from 0.2% in June.

The latest BRC-Nielsen Shop Price Index indicates that food inflation fell to 2.2% in July, from 2.7% in June, while non-food deflation gathered pace, to 2.1% from 1.9% in June.

Helen Dickinson, director general of the British Retail Consortium, which published the monthly index in partnership with information company Nielsen, said: “Shop prices have now fallen for three consecutive months compared with last year and July’s rate showed the biggest drop for six and a half years.

“This is great news for hard pressed families whose budgets have been squeezed by rising utility bills, transport and other costs. It shows just how hard retailers are working to serve their customers and underlines how deep the promotions and discounts from retailers are at the moment.

“In particular, there has been significant discounting of clothing and footwear across women’s, men’s and children’s categories. Anyone who’s been waiting to update their wardrobe would be well advised to look at some of the deep discounts that are currently available.

“Food inflation has also dropped from last month and is now at its lowest rate since summer 2010.”

Mike Watkins, head of retailer and business insight at Nielsen, added: “Whilst the 2013 heatwave is bringing strong sales uplifts for food retailers it`s holding back some non-food sales growth, so the welcome slowdown in shop price inflation in July should benefit most retailers and help to kick start consumer demand as we enter the peak holiday period.”

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Non-food prices are now at their lowest rate since December 2008. The majority of the 0.2 percentage point fall in July was driven by the clothing and footwear category, which accelerated to its deepest deflation rate since the series began in December 2006.

This category fell 3.0 percentage points from June to minus 9.7%, as the price of women’s and children’s clothing and footwear fell sharply. The period covered by the survey ran from July 1 to July 5, before the heatwave, meaning that retailers came into the summer sales season on the back of lacklustre demand.

The slowing rate of food inflation, currently at a three-year low, was driven almost entirely by the fresh food category, with vegetables, fish and meat driving the fall.

Promotional activity remained at elevated levels across both food and non-food sectors. The recent hot weather gave retailers an opportunity to step up the level of discounting of seasonal items.