Shop prices fall for first time in nearly three years

Retailers slashing prices to get rid of summer stock helped overall shop prices fall into deflation Credit: Alamy

Prices in shops are falling for the first time in nearly three years, new figures show.

Retailers slashing prices of fashion and household goods to get rid of summer stock helped overall shop prices fall into deflation in August for the first time since October 2021, according to an influential retail group.

The discounting followed a difficult summer period for retailers due to poor weather and the continuing cost-of-living crisis.

Shop prices in August were 0.3% lower than a year earlier, the British Retail Consortium found.

The figure is down from inflation of 0.2% in July and below the three-month average rate of 0%. The survey period covered the first week of August.

The overall decline was driven by the deflation of 1.5% of “non-food” products, which refers to products like clothing, furniture and electronics.

Meanwhile, food prices were up 2% in August, compared with the previous year.

Fresh food inflation slowed to 1% in August – with fruit, meat and fish seeing the biggest monthly decrease since December 2020, the British Retail Consortium (RBC) said.

Ambient food inflation – which means products that can be safely stored at room temperature, such as tinned goods, crisps, tea bags and biscuits – remained more stubborn at 3.4%.

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Helen Dickinson, chief executive of the BRC, said: “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" she added.

“As a result, we could see renewed inflationary pressures over the next year.” Mike Watkins, head of retailer and business insight at NielsenIQ, said many food retailers introduced price cuts to help drive sales during the “summer of sport”, amid the popularity of events including the Paris Olympics and Euro 2024 football tournament.

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