Shop prices fall this month driven by clothing discounts

Prices for shoppers tumbled more sharply this month as retailers tried to drive the recovery in post-lockdown sales further with discounts on clothing.

The BRC-NielsenIQ Shop Price Index for June revealed that prices declined by 0.7% year-on-year, accelerating from a 0.6% fall in May.

It said this was particularly driven by a 1% fall in the price of non-food items, with cheaper fashion items significantly pushing deflation.

Meanwhile, the fall in food prices slowed to 0.2% for the month from 0.3% in May, representing the third consecutive month of cheaper food.

The price of fresh food continued to slump for the seventh month in a row, although the 0.7% fall represents a slow-down from last month’s 1% deflation rate.

British Retail Consortium CEO Helen Dickinson said: “There is good news for consumers as June saw overall prices fall at a slightly faster pace than last month.

“Non-food prices, particularly for fashion, remained deflationary as businesses tried to prolong the recent pick-up in consumer spend.

“Food prices also fell, which is a testament to supermarkets battling to keep prices low for their customers.”

The trade body chief added that costs are rising for retailers due to “global food price increases, Brexit red-tape, Covid-related supply chain disruption, raw commodity shortages and increased shipping and petrol costs”.

Shop prices continued to slide despite a surge in wider inflation across the economy, driven by higher fuel costs.

Earlier this month, the Office for National Statistics reported that Consumer Price Index (CPI) inflation for May jumped to 2.1%, ahead of the Bank of England’s 2% target rate.

Mike Watkins, head of retailer and business insight at NielsenIQ, said: “The fact that shop prices remain in negative territory despite the recent rise in CPI is indicative of the competitive retail landscape in the UK and keeping prices low for as long as possible is good news for shoppers.

“However, with four in 10 shoppers watching their spending more than they were before the pandemic, this suggests that many millions of households are going to see their budgets squeezed should prices start to rise.”