August sees non-food deflation fall to four-year low

By

Barbara Santamaria

Published
Aug 30, 2017

Overall shop prices were 0.3% lower in August than the same month last year, marking a slight deceleration from the 0.4% fall in July, while non-food products saw prices reach their slowest rate of deflation in more than four years.

According to the BRC-Nielsen shop price index, non-food prices fell by 1.3% in August, compared to a 1.5% drop in July, as retailers struggle with cost pressures to keep prices down.

“The reality is that with protection from hedging policies coming to an end, Non-Food retailers are running out of options for protecting shoppers from the significant increases in the price of imported goods since the EU referendum in June last year,” said Helen Dickinson, Chief Executive, British Retail Consortium.

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The British Retail Consortium expects non-food prices to continue rising.

Food price inflation stood at 1.3% this month, a slight increase on July, when prices increased by 1.2%. Food prices are also expected to rise as winter approaches, with the cost of importing fruit and vegetables driving the increase.

“While the dynamics of individual elements of the index play out in different ways from month to month, the fact is that the overall pressures on prices are still weighted upwards. That will put an increasing strain on already stretched family budgets. Therefore, it is imperative that the Government puts the UK’s households at the top of its agenda as it enters into negotiations on our future trading relationship with the EU,” said Dickinson.

“It should do all it can to avoid a situation where further tariffs and administrative costs lead to price increases on top of those already being faced by consumers.”