Overall shop prices reported deflation for the sixteenth consecutive month, decelerating to 1.6% in August from 1.9% in July. The deceleration in the overall SPI figure has broken the four month declining trend. Food inflation remained at 0.3% in August – the lowest ever recorded. Non-food reported deceleration in deflation of 2.9% in August from 3.3% in July.
Helen Dickinson, British Retail Consortium Director General, said: "Shop prices reported deflation of 1.6 per cent in August and marked sixteen consecutive months of falling shop prices for consumers. Clearly retailers are continuing to help drive down the overall inflation rate (Consumer Price Index).
"The summer months saw retailers provide plenty of attractive offers on fresh food goods which saw their lowest level of inflation this year, with vegetables, fish and also milk, cheese and eggs contributing to the downward pressure. Big-ticket goods that we tend to associate with the summer, gardening, electricals, DIY, furniture and floorcovering, helped to sustain low prices."
"What's more, as the UK economy continues to pick up, the benefits of subdued cost increases - oil and commodity prices remained relatively flat over the first half of the year – incurred by retailers will be passed on to customers. While the Bank of England's recent estimates suggest that retailers margins are still below pre-crisis levels, retailers will take heart from an outlook for costs that is broadly encouraging."
"Meanwhile the industry will keep building the solid foundations for growth in consumer spending."
Mike Watkins, Head of Retailer and Business Insight, Nielsen, said: "Many non-food retailers will have looked to keep prices stable as end of season ranges sell through, and for supermarkets there was an opportunity to capitalise on the improved summer weather by keeping prices low, to tempt shoppers to spend a little more on food and drink. With the trading environment still challenging, all retailers will now be keen to keep prices as competitive as possible to encourage consumers back into store after the summer holidays."
Source: British Retail Consortium