Falling shop prices are not set to last, states BRC-NielsenIQ in its latest price index, covering June 2021.
It reports that shop price deflation accelerated to -0.7% YoY in June compared to May’s decrease of -0.6%, while non-food deflation accelerated to -1.0% in June, compared to a fall of -0.8% in May.
Helen Dickinson OBE, chief executive, British Retail Consortium, says: “There is good news for consumers as June saw overall prices fall at a slightly faster pace than last month. Non-food prices, particularly for fashion, remained deflationary as businesses tried to prolong the recent pickup in consumer spend. Food prices also fell, which is a testament to supermarkets battling to keep prices low for their customers.
“Meanwhile, retailers’ costs are continuing to mount due to global food price increases, Brexit red-tape, Covid-related supply chain disruption, raw commodity shortages and increased shipping and petrol costs. The increasing cost burden on retailers may be passed onto the consumer, threatening price rises as the pressure mounts in the months ahead, especially with additional Brexit checks this autumn. The Government must help to minimise the cost impact on consumers by ensuring that the new checks and documentation requirements this autumn avoid adding further friction to the import of goods.”
Mike Watkins, head of retailer and business insight, NielsenIQ, adds: “The fact that shop prices remain in negative territory despite the recent rise in CPI is indicative of the competitive retail landscape in the UK, and keeping prices low for as long as possible is good news for shoppers. However, with four in 10 shoppers watching their spending more than they were before the pandemic, this suggests that many millions of households are going to see their budgets squeezed should prices start to rise."
