June shop prices fall for the first time in 8 months

June shop prices
// June shop prices return to deflation for the first time in eight months
// Shop Prices fell by 0.1%, compared to May when prices increased by 0.8%.
// Non-food prices decrease of 1.2% from the 0.2% increase in May, while food inflation was steady at 1.8%

Shop prices have returned to deflationary territory for the first time in eight months after retailers resorted to discounts to attract shoppers amid the recent wet weather.

According to the latest BRC-Nielsen Shop Price Index, prices were down 0.1 per cent in June – the first fall since October last year and a marked reversal of the 0.8 per cent inflation recorded in May.

Non-food price deflation drove the fall, recording a decrease of 1.2 per cent from the 0.2 per cent increase in May – as the cost of clothing and footwear, furniture, electricals, DIY and other categories were all below the level of June 2015 prices.

However, food inflation held steady at 1.8 per cent as fresh food price increases eased back to 1.4 per cent from 1.5 per cent in May.

This was offset by growth in the cost of ambient foods, which recorded inflation of 2.3 per cent compared to 2.1 per cent in May.

BRC and Nielsen said retailers have been forced to slash prices to boost trade in poor early summer weather and as shopper finances come under “significant strains”.

Supermarkets have also been cutting prices to help offset cost increases they are seeing in the supply chain, which is keeping food inflation broadly stable.

“While the overall fall in prices was small, and food inflation remains steady, it nonetheless represents a welcome break for consumers after several months of inflation,” BRC chief executive Helen Dickinson said.

“It is also a sign of the fierce competition between retailers.”

Nielsen head of retailer insight Mike Watkins said: “On the non-food high street, retailers are maintaining the level and depth of price cuts, to help drive footfall following dampened demand due to the weather and wavering retail spending.”

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