Stiff competition, weak consumer spending keeps shop prices down

BRC Nielsen Shop Price Index:
"Consumers were the real winners this month." - BRC CEO Helen Dickinson
// August Shop Prices fell by 0.4% compared to a 0.1% decrease in July
// Non-Food prices fell by 1.5% in August compared to July’s decrease of 1.2%
// Food inflation eased slightly to 1.6% in August from 1.7% in July

Consumers benefited from the fastest drop in shop prices in August in more than a year, according to new figures.

The latest BRC-Nielsen Shop Price Index indicates that prices fell by 0.4 per cent on this time last year compared with 0.1 per cent in July, thanks to weak consumer spending and stiff competition.

The figure fell below the 12 and six-month average price increases of 0.3 per cent and is the fastest rate of decline since June 2018, according to the index.

Non-Food prices fell by 1.5 per cent in August compared to July’s decrease of 1.2 per cent, falling at faster rate than both the previous month and the 12-month average.

Meanwhile, food inflation eased slightly to 1.6 per cent in August from 1.7 per cent in July due to higher levels of discounting from supermarkets.

Of that, fesh food inflation accelerated in August to 1.4 per cent from 1.2 per cent in July while ambient food inflation slowed significantly to 1.8 per cent in August from 2.4 per cent in July.

The index indicated that many retailers used discounts to counter weak spending, with prices for DIY goods, furniture, clothing and electricals all lower than their August 2015 prices.

“Consumers were the real winners this month as prices fell at their fastest rate in over a year,” BRC chief executive Helen Dickinson said.

“Weak consumer spending and stiff competition has kept prices down in the UK, however a disruptive no-deal Brexit, which would raise the cost of imported goods, could reverse this trend.”

Nielsen head of retail insight Mike Watkins said: “August is often a difficult month for retailers made more challenging this year by unseasonable weather early in the month, and we have seen the return of vouchering by many supermarkets and some non-food retailers bringing forward end-of-season discounts to help drive sales.

“Consumers remain uncertain about when and where to spend but the good news is that any inflationary cost pressures that may be building in the food supply chain have not yet reached shop prices.”

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