Shop price deflation slows in July, BRC says

Competition continued to drive prices down in July, according to a report by the British Retail Consortium (BRC), albeit by less than in the month before.

Shop prices fell at a 1.6% year-on-year clip in July.

Chief Executive of BRC Helen Dickinson OBE attributed that to an increase in competition. “This is testament to the strength of competition between retailers, which is as fierce as it has ever been” said Dickinson.

Nielsen´s Head of Retailer and Business Insight, Mike Watkins, added: "Once again it is clear there is currently no inflationary pressure coming from retail and discounting looks set to be a catalyst to stimulate demand in the coming months.”

The rate of deflation in July was however 0.4 percentage points less than in the previous month and the slowest since August last year, possibly indicating price pressures had been building since the time of the UK’s vote to leave the EU.

Nonetheless, Dickinson said: “It’s too early to say if this is the beginning of the end of sustained price deflation or whether pressures in the wider economy could merely mark the end of the beginning”.

The depreciation of the pound had pushed up the prices of many imports goods included in the survey.

Food deflation remained at 0.8% for the second consecutive month. Mysupermarket, a shopping comparison website said on Tuesday that the cost of a basket of popular supermarket items rose 1% in July, the second monthly increase in a row.

Inflation had remained below the Bank of England's 2.0% target for two-and-a-half years. Last year it was zero, which was the lowest since comparable records began in 1950. Consumer prices had however started to rise again more recently, increasing by 0.5% over the year ending in June.