In August, UK retail prices fell for the first time in nearly three years, driven by significant discounts.
- Retail price drop recorded at 0.3% compared to August last year.
- Non-food retail prices decreased by 1.5% due to unsold summer stock clearance.
- Food price inflation eased to 2%, the lowest since December 2020.
- The economic outlook remains uncertain due to geopolitical tensions and climate change.
In August, UK retail prices experienced a decline of 0.3% compared to the same period last year, marking the first decrease in nearly three years. This decline represents a reversal from the 0.2% inflation recorded in July, indicating a significant shift in pricing trends, according to data from the British Retail Consortium (BRC) and NielsenIQ.
Prices in the non-food category saw a substantial reduction, dropping by 1.5% on a year-on-year basis. This was the lowest rate since July 2021, as retailers engaged in extensive discounting to clear unsold summer merchandise following a challenging sales period.
Food price inflation also moderated, easing to 2% in August from 2.3% in July. Fresh food prices saw the most notable slowdown, with inflation decreasing to 1%, attributed to reduced supplier input costs. Inflation for ambient food items slightly decreased to 3.4%.
Despite the lowering of prices, Helen Dickinson, Chief Executive of the BRC, expressed caution about the future, citing concerns over climate change affecting global harvests and increasing geopolitical tensions potentially reigniting inflation.
Retail sales in the UK showed signs of recovery in July, with a 0.5% increase in the volume of goods purchased from the previous month, driven by increased discounting efforts. This recovery followed a 0.9% contraction in sales in the preceding month, highlighting a volatile retail environment.
Department stores and sports equipment shops were pivotal in driving this rebound, attributed partly to discounting strategies and events such as the Euros football tournament. However, sales in clothing and household goods sectors decreased, continuing a trend of fluctuating consumer spending habits.
The recent decline in retail prices, while offering temporary consumer relief, underscores ongoing economic unpredictability.
