Weak consumer spend and strong competition pushed shop prices down in August, while food inflation eased slightly, according to new data.
The British Retail Consortium (BRC)-Nielsen Shop Price Index showed that shop prices fell by 0.4% in August, compared to a 0.1% decrease in July.
Food inflation eased slightly to 1.6% in August, down from 1.7% in July, while ambient food inflation slowed significantly to 1.8% in August, from 2.4% in July. Fresh food inflation accelerated to 1.4% in August, up from 1.2% in July, while non-food prices fell by 1.5%, compared to July’s decrease of 1.2%.
BRC chief executive Helen Dickinson said: “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.”
Nielsen head of retailer and business insight, Mike Watkins, added: “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.”
Over a 12-week period ending 10 August, Lidl and Aldi enjoyed sales increases of +12.1% and +9.5% respectively year on year, while Sainsbury’s (-0.4%) remained ahead of the Co-op Group (-0.8%), Morrisons (-2.4%), Asda (-1.1%) and Tesco (-1.7%), Nielsen said.