Shop prices enter deflation for first time in almost three years

Shop prices have entered deflation for what is reportedly the first time in nearly three years, new figures collated by the British Retail Consortium (BRC) and NielsenIQ have shown. For the period August 1 to 7, shop price deflation came in at 0.3 percent, down from inflation of 0.2 percent in the previous month.

This was also below the three-month average rate of 0.0 percent, while shop price annual growth remained at its lowest rate since October 2021. As food inflation slowed to 2 percent in August, non-food remained in deflation at -1.5 percent for the month, down from the prior -0.9 percent. This was below the three month average rate of -1.1 percent.

According to the chief executive officer of the BRC, Helen Dickinson, this is the first time shop prices fell into deflation in nearly three years. She cited heavy discounting on summer stock by retailers as the cause of non-food deflation, particularly on 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 noted.

She continued: “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.”