Weak consumer spending and stiff competition keep prices down
Consumers benefited from the fastest drop in shop prices in August in more than a year, figures show.
Weak consumer spending and stiff competition saw prices fall by 0.4% on this time last year compared with 0.1% in July, according to the BRC-Nielsen Shop Price Index.
The figure fell below the 12 and six-month average price increases of 0.3% and is the fastest rate of decline since June 2018, according to the index.
Prices of non-food goods fell at a faster rate than both the previous month and the 12-month average, while food inflation eased slightly due to higher levels of discounting from supermarkets.
Many retailers used discounts to counter weak spending, with prices for DIY goods, furniture, clothing and electricals all lower than their August 2015 prices.
British Retail Consortium chief executive Helen Dickinson said: “Consumers were the real winners this month as prices fell at their fastest rate in over a year.
“Weak consumer spending and stiff competition has kept prices down in the UK, however a disruptive no-deal Brexit, which would raise the cost of imported goods, could reverse this trend.”
Mike Watkins, head of retailer and business insight at Nielsen, said: “August is often a difficult month for retailers made more challenging this year by unseasonable weather early in the month, and we have seen the return of vouchering by many supermarkets and some non-food retailers bringing forward end-of-season discounts to help drive sales.
“Consumers remain uncertain about when and where to spend but the good news is that any inflationary cost pressures that may be building in the food supply chain have not yet reached shop prices.”