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Weak consumer spending see retail prices decrease

Published: 2 September 2019 - Kiran Grewal

According to the British Retail Consortium (BRC), August Shop Prices fell by 0.4% compared to a 0.1% decrease in July. This is below the 12- and 6-month average price increases, both of 0.3%, and is the fastest rate of decline since June 2018.

Non-Food prices fell by 1.5% in August compared to July’s decrease of 1.2%. This is below the 12- and 6-month average price declines of 0.6 and 0.7%, respectively. It is the fastest rate of decline since June 2018.

Overall prices were pushed further into deflationary territory by Non-Food goods that saw prices decline at a faster pace in August. Out of the seven Non-Food categories, three were deflationary. Weak consumer spend and intense competition kept price increases well at bay, with many retailers using discounts, especially for basic items (which are oversampled in our index). Case in point, prices for five categories – DIY, Furniture, Clothing, Electricals and Other Non-Food, are below their August 2015 prices. 

 

Helen Dickinson OBE, chief executive of the British Retail Consortium commented: “Consumers were the real winners this month as prices fell at their fastest rate in over a year. Prices of non-food goods fell at a faster rate than both the previous month and the 12-month average, while food inflation eased slightly due to higher levels of discounting from supermarkets. 

“Weak consumer spending and stiff competition has kept prices down in the UK, however a disruptive no-deal Brexit, which would raise the cost of imported goods, could reverse this trend. In the interests of both consumers and retailers, the Government must redouble its efforts to find a workable agreement with the EU that would avoid a no deal scenario.”

Mike Watkins, head of retailer and business insight at Nielsen said: “August is often a difficult month for retailers made more challenging this year by unseasonable weather early in the month, and we have seen the return of vouchering by many supermarkets and some non-food retailers bringing forward end of season discounts to help drive sales. Consumers remain uncertain about when and where to spend but the good news is that any inflationary cost pressures that may be building in the food supply chain, have not yet reached shop prices.” 

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