Food deflation remained at 0.8% in July for the second consecutive month, with overall shop prices down 1.6% year on year, according to the latest BRC - Nielsen Shop Price Index.
Fresh food deflation slowed to 1.2% in July from 1.5% in June, driven by vegetables, fruit, and oils and fats. Ambient food reported annual deflation for the first time since April 2015, with prices down 0.1%.
British Retail Consortium chief executive Helen Dickinson attributed the “long stretch of deflation” to the strength of competition between retailers.
“In food retailing, the battle for our custom has seen yet more deflation at near-record levels. Shoppers will have found fresh food prices 1.2 per cent down on the same period last year and ambient food was cheaper for the first time since April 2015,” she said.
However, she pointed out that this month’s figures have seen the rate of deflation decelerate. “Total price falls have slowed to -1.6% from June’s -2.0%. 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,” she added.
Nielsen head of retailer and business insight Mike Watkins said: “With unpredictable weather and a change to consumer sentiment underway, we have seen retailers cut prices or increase promotional activity in the last few weeks to help top line sales growth, so it is of no surprise that shop price deflation is lower in July than in any other month this year.
“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.”