Shop prices fall for the first time since late 2021

27th Aug 2024 07:20

(Sharecast News) - Shop prices in the UK in August experienced deflation for the first time since October 2021, according to fresh data released on Tuesday, with a decrease of 0.3%.

That marked a significant shift from the prior month's slight inflation of 0.2%.

The drop brought the annual growth rate to its lowest level in nearly three years, according to the latest BRC-NielsenIQ Shop Price Index.

Non-food items saw the most significant deflation, with prices falling by 1.5% in August - a further decline from the 0.9% drop in July.

That was the lowest inflation rate in the non-food sector since July 2021.

Food prices, while still experiencing inflation, showed a marked slowdown.

Overall food inflation decreased to 2% in August from 2.3% in July, reaching its lowest level since November 2021.

Fresh food prices, in particular, saw a notable decline in inflation, dropping to 1% in August, down from 1.4% in July, the lowest since October 2021.

Ambient food inflation also decelerated slightly, falling to 3.4% in August from 3.6% in July, marking its lowest rate since March 2022.

"Shop prices fell into deflation for the first time in nearly three years," said Helen Dickinson, chief executive of the British Retail Consortium.

"This was driven by non-food deflation, with retailers discounting heavily to shift their summer stock, particularly for fashion and household goods.

"This discounting followed a difficult summer of trading caused by poor weather and the continued cost of living crunch impacting many families."

Dickinson said food inflation eased with fresh food prices, especially fruit, meat and fish, seeing the biggest monthly decrease since December 2020 as supplier input costs lessened.

"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.

"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."

Reporting by Josh White for Sharecast.com.