Shop price falls slowed in July, Nielsen and BRC find

The monthly index, which measured prices for the period between 1st and 7th July, found that shop prices as a whole fell 1.3% in July compared to a decrease of 1.6% in June.

The 1.3% drop was below the year average fall in prices of 0.9%, but above that for the past six months, which was 1.4%.

The slowing down in price reductions follow a period of above-average reductions, with May’s BRC/Nielsen index seeing shop prices fall at their fastest rate since 2006.

The July index saw non-food prices fell by 2.9%, which again slowed from a 3.4% fall seen in June’s study. The six-month average was a 3.1% reduction, but the year average was a fall of 2.3%.

Food inflation was steady at 1.5% in July, which was the third consecutive month where food prices rose at the same rate, and also matches the six and 12-month averages.

Fresh food inflation also increased by 0.9%, up from 0.5% in June and above the yearly and half-yearly averages of 0.7% and 0,6% respectively.

Ambient food inflation was at 2.3%, down from 2.9% in June. The 12-month average was 2.5% while the 6-month average rise was at 2.7%.

The results come as the retail sector grapples with the fallout of an almost four-month lockdown from mid-March in the UK to stop the spread of Covid-19, and the knock-on effects on footfall and profits for many retailers.

Helen Dickinson, chief executive of the BRC, said: “Falling prices at tills is good news for shoppers, and will hopefully tempt more people onto our high streets and retail destinations.

“This remains a difficult time for the industry as a whole and government could help to mitigate this by supporting retailers and landlords over rent costs and taking action to boost consumer demand. Without this, we may see many more store closures and subsequent job losses.”

Mike Watkins, head of retailer and business insight at Nielsen, said: “Now that all of retail has re-opened for business, keeping prices stable will be important as it’s going to be difficult for retailers to second guess the strength of consumer spend with social distancing measures continuing, and consumer confidence still low.”