Shop prices fell at their fastest rate since February 2007 and have reported an annual deflation for the second consecutive month in June, falling 0.2% from 0.1% in May.
According to the British Retail Consortium (BRC), the overall figure was affected by food inflation which increased to 2.7% in June from 2.4% in May. Non-food reported annual deflation of 1.9% in June from 1.5% in May.
Helen Dickinson, BRC General, said: “The deflation is driven entirely by non-food, a reflection that the summer sales are well underway as retailers battle it out.”
She added, “The volatile weather also had a part to play in pushing down non-food prices. It’s telling that the categories which saw some of the deepest discounting – clothing, footwear, furniture and DIY – were those whose sales were hit the hardest during the lingering cold snap.
Dickenson said that food inflation has edged up marginally since the near three-year low seen in May, driven by slight increases in ambient and fresh food prices. She said that she would expect food inflation to remain “fairly stable over the medium term.”
Peter Saville, partner at advisory and restructuring firm Zolfo Cooper said that the figures show that the price war will continue and that everyday discounting is very much the new normal.
He said “The most recent sales figures hint at an upturn and show that retailers are increasing traffic and, by association, sales volumes – if not necessarily profits.”