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Shop prices fall yet again

20poundnotesShop prices fell for the fifteenth consecutive month in July, with deflation of 1.9% in July: the deepest level of deflation since December 2006.

Food inflation fell to 0.3% in July – the lowest ever recorded by the BRC-Nielsen Shop Price Index. Non-food reported deceleration in deflation of 3.3% in June from 3.4% in June.

'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. There is very little food inflation at the moment and this 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,' says Mike Watkins, Nielsen head of retailer and business insight.

'Shop price deflation deepened still further in July and marked fifteen consecutive month of falling shop prices for consumers. This is great news for households who are benefitting from fierce competition within the industry at a time when disposable incomes remain under pressure,' says Helen Dickinson, British Retail Consortium director general.

'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.'