Food inflation holds steady as overall shop prices dip

June shop prices

Food price inflation cooling throughout the heatwave has allowed overall shop prices to fall in June, although the drop was not as sharp as it was in May.

According to the monthly BRC-Nielsen Shop Price Index, overall shop prices were 0.5 per cent lower last month compared to June 2017.

On a month-on-month basis, the decline was smaller than May’s 1.1 per cent drop.

The index has shown shop prices in deflationary territory for 62 consecutive months now, which indicates retailers are feeling pressured to offer discounts to attract customers.

The index also showed that food inflation held steady at 1.2 per cent in June, thanks to fresh food inflation slowing marginally to 0.8 per cent from 0.9 per cent in May, and ambient food inflation inching down to 1.6 per cent from 1.7 per cent in May.

Meanwhile, non-food prices fell by 1.6 per cent – less steep than May’s 2.5 per cent decline and the lowest rate of deflation since December 2017.

“Food shoppers can breathe a sigh of relief with the rate of food inflation remaining steady and retailers continuing to fight back against a tough trading environment with competitive pricing and deals,” BRC chief executive Helen Dickinson said.

“Changes in global food prices of dairy and cereal as well as higher oil prices will mean this battle looks set to continue in the coming months.”

She added: “Against a backdrop of transformational change across the industry and some high profile store closures over recent weeks, government and policy makers need to do more to address the burden of things like business rates to help to ease the pressure and to support retailers to thrive through this transition and continue to offer great products to customers across the country.”

Nielsen head of retailer insight Mike Watkins said: “Food inflation across retail stores is holding at the same level as last month, which is good news for shoppers and helpful to retailers as the continuation of summer weather is supporting sales of seasonal fresh foods.

“And with promotions in place around the World Cup this will be encouraging shoppers to spend. However, pricing in the non food channel is more challenging and after many months of deflation and recent weaker demand, prices are still lower than a year ago.”

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