The BRC-Nielsen Shop Price Index (SPI) has reported annual deflation of 1.9% from 1.8% in July, accelerating deeper than the 12-month average rate of 1.1%. This is the deepest rate of deflation since the series began in December 2006. Non-food deflation accelerated to 3.3% from 3.4% in June.
In July, deflation in the Furniture and Floorcoverings category accelerated to 2.7% from 1.5% in June, above both the 12- and three-month averages of 1.9% and 1.7% respectively. House textiles experienced decelerated deflation, while the furniture, furnishing and carpet category experienced accelerated deflation in July.
Gross mortgage lending was £17.5b in June, up 4.3% on May’s figures and up 17.3% compared to June 2013. In the year to July, prices rose by 10.6%, the fourth month of double-digit growth this year, although slowing slightly from June’s rate. Once again, the figures hide a sharp contrast between London and the rest of the UK.
Helen Dickinson, BRC director general, says: “Shop price deflation deepened still further in July and marked fifteen consecutive month of falling shop prices for consumers. This is great news for households who are benefitting from fierce competition within the industry at a time when disposable incomes remain under pressure.
"Against a backdrop of stable commodity markets, the stronger sterling making imports cheaper and wavering retail spending, current levels of deflation are expected to continue. While this is great news for consumers, trading conditions across the industry remain challenging. Structural changes in retail are challenging existing business models which in many cases are squeezing margins while other costs, such as business rates, continue to rise. While we know retailers will be working hard to sustain low prices, continued support from Government will be key to maintaining a sustained recovery in the economy.”
Mike Watkins, head of retailer and business insight, Nielsen, adds: “On the non-food high street, retailers are maintaining the level and depth of price cuts and promotions to help drive footfall over the holiday period.”
