UK shop prices have dropped for the first time since the cost of living crisis began nearly three years ago, as food inflation eased and retailers offered discounts on clothes and household goods to shift unsold summer stock.
New data showed prices were down 0.3% in the first week of August, compared with the same period last year. That compares to a 0.2% rise in July, and the three-month average of 0%.
Price deflation
It also marks the first period of price deflation – where the prices for goods and services decrease – since October 2021, according to the British Retail Consortium-NielsenIQ shop price index.
The decline was driven by a fall in prices of non-food products, as retailers started to strategically discount their wares. Shops have been working to shift stock after a tough summer, during which consumers were less willing to brave cold and rainy weather to get to the high street, and less eager to buy summer clothing. Retailers have also been trying to figure out how to boost spending while households are still grappling with high living costs.
The chief executive of the British Retail Consortium (BRC), Helen Dickinson, said the change 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,” she said.
“Food inflation eased, with fresh food prices, especially fruit, meat and fish, seeing the biggest monthly decrease since December 2020 as supplier input costs lessened.” Clothing and footwear were among the most heavily discounted products, having fallen for the eighth consecutive month in August as demand weakened. Electronics were also a driver of price deflation, with tech prices starting to come down to more affordable levels, after a few years of rising prices, the BRC said.
Pressure on households
Food prices have continued to put pressure on households, increasing by 2% in August, compared to last year
