Shop prices fell more sharply in July as food and fashion retailers battled for household spending but cost pressures are mounting for the UK’s retailers, a survey showed.
Store prices fell 1.2% from a year earlier compared with a decline of 0.7% a month earlier, according to the British Retail Consortium/NielsenIQ index.
Non-food prices dropped at an annual rate of 1.8% in July, steepening from a drop of 1% in June. The annual rate of food deflation doubled to 0.4% in July compared with June, led by the price of fresh produce. The BRC said supermarkets reduced prices while fashion retailers launched summer sales to attract shoppers.
The economy reopened during July with almost all restrictions lifted on the 19th of the month, giving consumers more options to eat out, travel and spend on leisure instead of in stores. The BRC warned that price reductions were unlikely to continue with retailers burdened by extra costs caused by Brexit and the pandemic.
Helen Dickinson, the BRC’s chief executive, 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.”