The British Retail Consortium Nielsen Shop Price Index revealed that, after two consecutive months of falling prices, the non-food index rose 0.2 per cent. Food posted a rise of 0.1 per cent month on month, but this is the lowest since February, when the index fell 0.1 per cent. The study said discounting will be the main stimulant of demand in the coming months.
Year-on-year shop prices rose 0.5 per cent in June, slightly more than the 0.4 per cent rise in May. And food-price inflation slowed for the third consecutive month to 3.6 per cent but, despite this, it remains the only cause of upward pressure on shop price inflation. However, non-food prices are showing deflation for the sixth month in a row, down 0.9 per cent.
BRC director-general Kevin Hawkins said: 'The high street continues to generate little inflationary pressure. From the point of view of a retailer - and indeed a consumer - the bank should wait until the full impact of the previous four rate rises works through before imposing yet another increase.'
Nielsen retailer services senior manager Mike Watkins said: 'Shop price inflation remains below consumer price inflation and the moderate increases in the price of food in the UK are being driven by wider economic conditions, such as global commodity prices and weather-related supply changes. With shoppers indicating that they are becoming more cautious about spending, non-food retailers will have to keep prices the same, or probably even lower, over the next six months.'
Separately, the Bank of England's monetary policy committee will make an announcement about interest rates tomorrow. There is much speculation that this will involve a rise.