Recent findings from the British Retail Consortium (BRC) indicate a significant shift in shop price trends, with inflation giving way to deflation for the first time in nearly three years.</strong>
According to the BRC’s data covering August 1 to August 7, shop price deflation has registered at a rate of 0.3% in August, a noticeable decline from the inflation rate of 0.2% recorded in July. This current deflation rate also falls below the three-month average of 0%, marking a pivotal moment as the annual shop price growth remains at its lowest point since October 2021.
In the food sector, inflation has also slowed, decreasing to 2% in August from 2.3% in July. Notably, this figure is below the three-month average rate of 2%, showcasing a continued easing in food inflation and hitting its lowest rate since November 2021.
Further breaking down the food category, fresh food inflation decelerated to 1% in August, a drop from 1.4% in July. This rate is significantly lower than the three-month average of 1.3% and represents the lowest inflation rate since October 2021.
Ambient food inflation also experienced a slowdown, registering at 3.4% in August compared to 3.6% in July. Once again, this rate is beneath the three-month average of 3.7% and is the lowest seen since March 2022.
Helen Dickinson OBE, the chief executive of the British Retail Consortium, commented on these findings: “Shop prices fell into deflation for the first time in nearly three years. This discounting followed a difficult summer of trading caused by poor weather and the continued cost of living crunch impacting many families. Food inflation eased with fresh food prices, especially fruit, meat, and fish, seeing the biggest monthly decrease since December 2020 as supplier input costs lessened.
“Retailers will continue to work hard to keep prices down, and households will be happy to see that prices of some goods have fallen into deflation. The outlook for commodity prices remains uncertain due to the impact of climate change on harvests domestically and globally, as well as rising geopolitical tensions. As a result, we could see renewed inflationary pressures over the next year.”
