Shop prices fell into deflation for the first time in nearly three years this month as retailers ramped up discounting to shift their summer stock.
The British Retail Consortium (BRC) and NielsenIQ found prices fell 0.3% in August, down from a 0.2% rise in July as growth remained at its lowest rate since October 2021.
Non-food prices led the drop, remaining in deflation at -1.5% this month, further down from the -0.9% in July.
Meanwhile, food price inflation slowed to 2.0% in August, down from 2.3% in the preceding month, as supplier input costs lessened.
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BRC chief executive Helen Dickinson said: “Shop prices fell into deflation for the first time in nearly three years. This was driven by non-food deflation, with retailers discounting heavily to shift their summer stock, particularly for fashion and household goods.
“This discounting followed a difficult summer of trading caused by poor weather and the continued cost of living crunch impacting many families.
“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. As a result, we could see renewed inflationary pressures over the next year.”
NielsenIQ head of retailer and business insight Mike Watkins added: “Shop price inflation has fallen again in August as many non-food retailers have kept promotional support due to the unpredictable weather and food retailers have introduced more price cuts to help drive incremental sales during the ‘summer of sport’.”
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