LONDON, 2014-8-8 — /EPR Retail News/ — Overall shop prices reported deflation for the fifteenth consecutive month, accelerating to 1.9% in July. This is the deepest level of deflation since the series began in December 2006. Food inflation fell to 0.3% in July – the lowest ever recorded. Non-food reported deceleration in deflation of 3.3% in June from 3.4% in June.
Helen Dickinson, British Retail Consortium Director General, said: “Shop price deflation deepened still further in July and marked fifteen consecutive month of falling shop prices for consumers. This is great news for households who are benefitting from fierce competition within the industry at a time when disposable incomes remain under pressure.
“The lowest ever recorded food inflation will be particularly welcomed by the lowest income households who typically spend around a third of their expenditure on food. Deep and widespread discounting across the grocery sector is intensifying with prices falling almost one per cent month-on-month – another record jump. After accounting for the use of multi-buys and vouchers, food prices are falling.
“Against a backdrop of stable commodity markets, the stronger sterling making imports cheaper and wavering retail spending, current levels of deflation are expected to continue. While this is great news for consumers, trading conditions across the industry remain challenging. Structural changes in retail are challenging existing business models which in many cases are squeezing margins while other costs, such as business rates, continue to rise.
“While we know retailers will be working hard to sustain low prices, continued support from Government will be key to maintaining a sustained recovery in the economy.”
Mike Watkins, Head of Retailer and Business Insight, Nielsen, said: “There is very little food inflation at the moment and this looks set to continue over the summer. Many supermarkets are reducing prices across ambient and seasonal fresh foods, which is helping shoppers make further savings on household bills. And on the non-food high street, retailers are maintaining the level and depth of price cuts and promotions to help drive footfall over the holiday period.”
British Retail Consortium, 21 Dartmouth Street, Westminster, London, SW1H 9BP. 020 7854 8900. info@brc.org.uk.