Deflation rates on shop prices continued to slow across the board throughout August, as retailers begin to run out of options to protect shoppers from price hikes.
According to the BRC–Nielsen Shop Price Index, overall shop prices in August saw deflation atjust 0.3 per cent, slowing from 0.4 per cent a month prior. This marks the second shallowest rate of deflation since 2013.
British grown seasonal food helped to offset inflation on supermarket shelves, with fresh food prices dropping for the second month in a row from one per cent in July to 0.8 per cent.
However, both ambient food prices saw a significant rise, jumping from 1.6 per cent in July to 1.9 per cent in August. This pulled overall food inflation up from 1.2 per cent to 1.3 per cent.
“Food inflation continues to be kept in check by lower increases in fresh and seasonal foods and as fresh is typically over 40 per cent of the shopper spend in supermarkets, this is helping to offset the rising cost of living in household bills,” Nielsen’s head of retail and business insight Mike Watkins said.
“Whilst consumer sentiment is on the turn and shoppers are becoming cautious about spending on big ticket items, prices are still very competitive on the high street and spend on food and drink has been strong over the summer, albeit disrupted by the changeable weather in August.”
Meanwhile, non-food saw its slowest deflation rate in four years thanks to being dragged down by electronics, which posted its slowest rate of deflation on record.
BRC’s chief executive Helen Dickinson said: “The reality is that with protection from hedging policies coming to an end, non-food retailers are running out of options for protecting shoppers from the significant increases in the price of imported goods since the EU referendum in June last year.
“While the dynamics of individual elements of the index play out in different ways from month to month, the fact is that the overall pressures on prices are still weighted upwards. That will put an increasing strain on already stretched family budgets.”