Shop prices see first fall in two years in July

Shop price inflation fell to its lowest level of 2023 in July and, for the first time in two years, prices fell compared to the previous month, driven by the big discounts in clothing and footwear sectors.

According to the BRC Shop Price Index, administered by NielsenIQ, the annual shop price inflation rate had declined to 7.6 per cent in July from 8.4 per cent in June.

Food price inflation also slowed to its lowest level this year, with falling prices across key staples such as oils, fats, fish, and breakfast cereals.

“These figures give cause for optimism, but further supply chain issues may add to input costs for retailers in the months ahead,” Helen Dickinson, chief executive at British Retail Consortium (BRC), said.

“Russia’s withdrawal from the Black Sea Grain Initiative and subsequent targeting of Ukrainian grain facilities, as well as rice export restrictions from India are dark clouds on the horizon. We expect some global commodity prices to rise again as a result, and food prices will be slower to fall.”

Mike Watkins, head of retailer and business insight at NielsenIQ, commented: “The summer holiday period should help discretionary spend a little and whilst inflation remains high, the outlook is improving. Shoppers continue to change how they shop as part of their coping strategies. This includes shopping at different retailers, buying lower priced items, delaying spend or only buying when there are promotions. This behaviour looks set to continue.”

Key findings:

• Non-Food inflation decelerated to 4.7% in July, down from 5.4% in June, the lowest level since December 2022.
• Food inflation decelerated to 13.4% in July, down from 14.6% in June. This is the third consecutive deceleration in the food category and the lowest level since December 2022.
• Fresh Food inflation slowed further in July, to 14.3%, down from 15.7% in June. This is the lowest level since November 2022, but inflation in this category remains elevated.
• Ambient Food inflation decelerated to 12.3% in July, down from 13% in June, the lowest since February 2023.