Shop prices fell at a faster rate in July than in June as supermarkets kept prices low to entice customers away from competitors.

The rate of shop price decline accelerated to 1.2% year-on-year in July compared to the equivalent figure in June of 0.7%, the BRC-Nielsen Shop Price Index showed.

The rate of deflation in July remained below the 12 and 6-month average price decreases of 1.6% and 1.4% respectively.

Food deflation stood at 0.4% in July from June’s rate of 0.2%, marking the fourth consecutive month of food prices falling. 

British Retail Consortium chief executive Helen Dickinson said: “UK consumers will be pleased to see another month of falling prices at the checkout. Annual prices in July fell at a faster rate than the previous month due to fierce competition between supermarkets keeping food prices low, and the steeper fall in non-food prices.”

Shoppers on a High Street

Non-food retail prices also fell at a faster rate in July compared to June, with deflation at 1.8%. 

Dickinson explained: “With the reopening of some holiday destinations and other recreational activities, consumers broadened their spending to include more leisure and travel. In response, non-food retailers, particular fashion businesses, have been working hard to keep consumer appetite alive with summer sales.”

Increased uncertainty attributed to ongoing disruptions may impact retail prices going forward. Dickinson said: “Recently, retailers have faced huge cost pressures as a result of rising costs of shipping, haulage and petrol as well as frictions from exiting the EU.”

”The additional paperwork and physical checks on EU imports in October and January may push prices up in the long-term. Government should do all it can to minimise the impact on consumers by reducing any further frictions and costly delays where it can.”

Households are also taking note of this unpredictability as restrictions eased. NielsenIQ head of retailer and business insight Mike Watkins said: “It’s an uncertain time for many households as the economy slowly reopens, and recent NielsenIQ research shows 41% of all shoppers are watching their spend more than they did before the pandemic.”