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July saw record level of deflation in shop prices

Published: 7 August 2014
Overall shop prices saw deflation for the fifteenth consecutive month, accelerating to 1.9%, in July.
July saw record level of deflation in shop prices
According to the BRC-Nielsen Shop Price Index, this is the deepest level of deflation since the series began in December 2006. Food inflation fell to 0.3% in July - the lowest ever recorded - while non-food reported a slight deceleration in deflation of 3.3% in July from 3.4% in June.

Mike Watkins, head of retailer and business insight at Nielsen, said: "On the non-food high street, retailers are maintaining the level and depth of price cuts and promotions to help drive footfall over the holiday period."

He also believes low food inflation looks set to continue over the summer: "Many supermarkets are reducing prices across ambient and seasonal fresh foods, which is helping shoppers make further savings on household bills."

Meanwhile British Retail Consortium director general Helen Dickinson said deepening shop price deflation was "great news for households, who are benefiting from fierce competition within the industry at a time when disposable incomes remain under pressure.

"Against a backdrop of stable commodity markets, the stronger sterling making imports cheaper and wavering retail spending, current levels of deflation are expected to continue.

"While this is great news for consumers, trading conditions across the industry remain challenging. Structural changes in retail are challenging existing business models which in many cases are squeezing margins while other costs, such as business rates, continue to rise.

"While we know retailers will be working hard to sustain low prices, continued support from Government will be key to maintaining a sustained recovery in the economy."

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