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Shop prices fall for second consecutive month but food costs rise

Non-food led the way in price cuts, as competition between retailers intensified, but the BRC warned prices could rise with a no-deal Brexit.

Retail inflation has fallen slightly (PA)
Retail inflation has fallen slightly (PA)

Shop prices fell very slightly in July as competition between retailers stiffened and non-food prices were cut, new figures show.

Price tags were 0.1% down on June – the second consecutive fall since October 2018 and below the yearly and six-month averages, according to the British Retail Consortium and data firm Nielsen.

But Helen Dickinson, chief executive of the BRC, warned that prices could rise if the UK crashes out of the EU without a deal on October 31.

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Meat prices have fallen for the third month in a row as global prices shrink, according to the BRC (Jonathan Brady/PA)

She said: “While we expect food inflation to remain steady over the next few months as retailers work hard to keep prices low, this will depend on whether the UK can navigate an agreement with the EU to ensure frictionless tariff-free trade continues after October 31st.”

The falling pound could also have an impact, as the cost of buying goods from overseas increases and petrol oil, which is priced in US dollars, also rises in cost.

Food prices did rise by 1.7% in July, although this was slightly down from June, when the rise was 1.8%.

Fresh food inflation also slowed from 1.4% in June to 1.2% in July, thanks to prices on meat falling for the third month in a row.

But ambient food grew 2.4% in July versus 2.3% in June.

Non-food led the way in sending prices down, falling 1.2% on average, which was the same amount as June. Electricals, and clothing and footwear were big fallers and low consumer confidence kept shoppers from making impulse purchases, according to the BRC and Nielsen.

Mike Watkins, head of retailer and business insight at Nielsen, said: “With so much economic uncertainty, it’s good news for shoppers that there was no pressure coming from shop price inflation during July.

“Looking ahead for the next few months, we anticipate broadly stable food inflation and non-food retailers looking to keep any price increase to a minimum, as shoppers continue to be cautious around their retail spend.”

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