The UK’s biggest retailers have reported the first monthly fall in shop prices for two years, as stores offered significant discounts during July’s unseasonably wet weather. The British Retail Consortium (BRC) stated that shop prices in July were 0.1% lower than in June, and the annual shop price inflation rate declined to 7.6% from 8.4% in June, the lowest level of the year.
Clothing and footwear saw some of the biggest price cuts, with retailers offering larger discounts to entice customers to spend on summer outfits despite the unfavorable weather. Food price inflation also slowed in July, with staples like oils, fats, fish, and breakfast cereals seeing reduced costs, providing some relief to cash-strapped consumers. However, annual food price growth was still relatively high at 13.4%, though it was a reduction from the previous month.
The BRC warned that retailers might face rising input prices in the coming months, especially for food, due to international events impacting global food commodity prices. Supply chain issues and other factors may contribute to increased input costs for retailers. Despite the recent slowdown in overall price rises, retailers are still working to keep falling prices on track, and the BRC called for the government to freeze business rates from the following April to prevent additional pressure on prices.
The retail industry, particularly food retailers, has been under scrutiny for the rising cost of living, leading supermarket executives to deny increasing their profits by keeping food prices high. However, overall price rises seem to be slowing down, with the UK’s annual inflation rate falling to 7.9% in June, leading to improved forecasts on interest rate hikes by the Bank of England. Discretionary consumer spending is expected to rise due to the summer holidays and an improving inflation outlook. Nonetheless, consumers continue to adapt their shopping behaviors, seeking out lower-priced items and looking for promotions, a trend expected to persist.