Shop prices fell for the fourteenth consecutive month in June, accelerating to 1.8% – which represents the deepest level of deflation since records began in December 2006, according to figures released by the British Retail Consortium (BRC) and Nielsen.
Food inflation fell to 0.6% in June, which is the lowest level ever recorded, while non-food reported an acceleration in deflation of 3.4% in June from 2.8% in May; also the lowest ever level recorded.
BRC director general Helen Dickinson said: “June saw plenty of good news for cash-conscious customers, and confirms that retailers have continued to work hard to help budgets go that bit further over the summer. This is the deepest level of deflation in non-food and the lowest rate of inflation for food since 2006 when our records began. Added to this, we see that consumer confidence is at its highest level since April 2005.
“Fierce competition among grocers has driven food price inflation to record low levels and with some grocers having announced plans to keep prices down, consumers stand to benefit for a while to come. The backdrop was equally promising with stable commodity markets and the continued strength of sterling suggesting inflation is set to remain low in the medium term. Although of course, a strong pound is not so good for those retailers exporting – one exciting and growing area in British retail.
“While the economic recovery continues to gather pace it was not all good news as household disposable incomes remain under pressure. Interestingly, while wage rises remain lacklustre throughout the economy the squeeze on disposable incomes is not coming from retail but other areas of the economy such as leisure and recreational activities. With shop price inflation at a record low this is undoubtedly an excellent time to go out and find a bargain”.
Mike Watkins, Head of Retailer and Business Insight, Nielsen, added: “Food inflation is still low, many supermarkets are price-cutting and non-food prices remain deflationary, so the high street continues to generate little inflationary pressure. Little in the way of immediate seasonal or weather-related price increases is anticipated, so the outlook for the next three months is for relatively stable shop price inflation. Helped by the increases in consumer confidence since the start of the year, this should encourage shoppers to spend more freely over the summer months.”