August sees shop prices drop for 16th consecutive month
Shop prices suffered their 16th consecutive drop in August, with food inflation remaining at its record low of 0.3%.
The overall shop price index measuring annual deflation rose from -1.9% to -1.6% month-on-month, but it remained deeper than the 12-month average rate of -1.2%.
Non-food deflation decelerated to 2.9% from 3.3% in July, with five sub categories experiencing deflation.
British Retail Consortium director general, Helen Dickinson, said: "Clearly retailers are continuing to help drive down the overall inflation rate [...] As the UK economy continues to pick up, the benefits of subdued cost increases [...] incurred by retailers will be passed on to customers.
"While the Bank of England's recent estimates suggest that retailers margins are still below pre-crisis levels, retailers will take heart from an outlook for costs that is broadly encouraging. Meanwhile the industry will keep building the solid foundations for growth in consumer spending."
Within Food, which has seen growth of just 1.3% in the past 12 months, August fresh food inflation dropped to 0.1%, its lowest level seen in a year, while ambient food climbed to 0.6%. On a month-on-month basis, prices rose by 0.2%, after a 0.7% fall in July.
Over the summer, retailers put many vegetables on offers, leading to sub-sector's lowest level of inflation this year.
Vegetables, fish and also milk, cheese and eggs contributed to the downward pressure, while big-ticket goods generally associated with the summer, such as gardening, electricals, DIY, furniture and floorcovering, helped to sustain low prices.
NR