The extent to which retailers are discounting in order to encourage cautious shoppers to buy is made clear in new analysis out today.
The BRC-Nielsen Shop Price Index shows a sharp fall (-1.2%) in non-food prices in July, compared to both the same time last year and a more gradual decline (-0.4%) compared to the previous month. Food prices, meanwhile, were up by 1.7% compared to last year, and by 0.1% compared to last month. Overall, shop prices were down by 0.1% in July on last year, and by 0.2% on last month.
The British Retail Consortium (BRC) says that of seven non-food categories, inflation eased for three of them, while prices fell into deflation for three others. That, said the BRC, was down to both a technology-driven long-term decline in the prices of electricals, clothing and footwear – and recent figures from the Office for National Statistics have shown these are categories where shoppers are moving faster towards buying online – as well as low consumer confidence. In a competitive environment, it said, the average non-food retailer was discounting to attract customers.
“With so much economic uncertainty it’s good news for shoppers that there was no pressure coming from shop price inflation during July,” said Mike Watkins, head of retailer and business insight at Nielsen. “Looking ahead for the next few months, we anticipate broadly stable food inflation and non-food retailers looking to keep any price increase to a minimum as shoppers continue to be cautious around their retail spend.”
Helen Dickinson, chief executive of the BRC, said: “Shop prices fell by 0.1% for the second month in a row. Many consumers will be pleased to see the price of non-food products continuing to fall at a steady rate, underlining the stiff competition between retailers that is driving down prices. Furthermore,food price inflation eased slightly in part due to the fall in global food prices.
“While we expect food inflation to remain steady over the next few months as retailers work hard to keep prices low, tis will depend on whether the UK can navigate an agreement with the EU to ensure frictionless tariff-free trade continues after October 31st.”
Image: InternetRetailing Media/Paul Skeldon