UK shop prices dropped by 2 percent in June, a bigger decline than the 1.8 percent drop in May, and the sharpest fall since February, according to the British Retail Consortium Nielsen Shop Price Index.

The drop is lower than the 12-month average of 1.8 percent, and marks the 38th consecutive month of falling prices, with the index showing that that non-food deflation fell to 2.8 percent in June from 2.7 percent in May.

British Retail Consortium chief executive, Helen Dickinson, said: “This extraordinary 38 month run of deflation has undoubtedly been good for consumers. While it has been driven largely by falling prices for non-food items we have, from time-to-time, seen food in deflationary territory as well – which provides the real boon for household budgets.

"While the good news for household budgets continues, prices in store will eventually rise again. However, the time it takes for any price increases to make a reappearance will depend on a combination of factors including the future value of the pound, commodity prices and any eventual impact of the Brexit vote on input costs.”

Nielsen head of retail and business insight, Mike Watkins, added: "Whilst changes in the economic landscape are anticipated next year, the current focus for the industry is the continued deflationary environment.

“This is good news for shoppers who benefit from falling prices but is added pressure for retailers as they balance increased costs from the national living wage and investment in multi-channel, with volatile consumer demand. A return to inflation is not expected just yet so it's business as usual over the summer months and encouraging shoppers to keep spending is the priority.”

 

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