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Retail prices continue to deflate in July

By Vivian Hendriksz

3 Aug 2016


Fierce competition amongst retailers continues to lead to price deflation across a wide range of UK products, as concerns regarding the potential effects of a Brexit and the current state of the country's economy adds to the sense of instability.

However, in spite of the unstable ground the UK sits upon, price deflation decelerated last month according to the latest data from the British Retail Consortium (BRC) and Nielsen's shop price index. Non-food prices dropped by 2.2 percent year on year in July in comparison to a 2.8 percent decline in June. On average, store prices saw a deflation of 1.6 percent last month, down from the 2 percent dip in June and above the 12 month average deflation of 1.8 percent.

Consumers have certainly benefitted from the price deflation as they have been able to pay less for their goods than last year, for 39 months in an "extraordinary" length of overall shop price deflation. "The long stretch of deflation continued in July with shop prices falling once again," commented British Retail Consortium chief executive Helen Dickinson in a statement. "This is testament to the strength of competition between retailers, which is as fierce as it has ever been."

"While we may have become accustomed to prices falling, it's worth noting that this month's figures have seen the rate of deflation decelerate. It's too early to say if this is the beginning of the end of sustained price deflation or whether pressures in the wider economy could merely mark the end of the beginning."

Nielsen head of retailer and business insight, Mike Watkins, added: "With unpredictable weather and a change to consumer sentiment under way, we have seen retailers cut prices or increase promotional activity in the last few weeks to help top line sales growth, so it is of no surprise that shop price deflation is lower in July than in any other month this year."

"Once again it is clear there is currently no inflationary pressure coming from retail and discounting looks set to be a catalyst to stimulate demand in the coming months."

Photo: Patrick Neylan at the English language Wikipedia [CC-BY-SA-3.0], via Wikimedia Commons