INCREASED competition among grocers and a rash of price cuts across clothing and electrical retailers has seen shop prices plummet at the fastest annual rate on record, according to a new report.
Prices across the nation’s shops fell by 1.8 per cent in June compared with the same month a year earlier – the sharpest decline since analysis began in 2006.
The reduction in the price tags of a range of goods represents some respite for ordinary consumers, who are increasingly struggling with the cost of living.
However, the study found the price of food is continuing to creep upwards, albeit at the lowest rate seen in eight years.
The findings were made in the latest British Retail Consortium Nielsen Shop Price Index, which breaks down price changes in food and non-food items month-on-month as well as year-on-year.
The latest report showed that the biggest fall in prices was for non-food items, with a year-on-year acceleration in deflation of 3.4 per cent in June, compared with 2.8 per cent in May.
Retail experts said the trend was down to a series of “great deals” being offered on clothing, footwear and electrical lines.
Overall, shop prices reported deflation for the 14th consecutive month in May, accelerating to 1.8 per cent in June.
Food inflation fell to 0.6 per cent in June, a rise on the previous year but also the lowest increase ever recorded.
Helen Dickinson, director general of the British Retail Consortium, said: “June saw plenty of good news for cash-conscious customers, and confirms that retailers have continued to work hard to help budgets go that bit further over the summer.
“This is the deepest level of deflation in non-food and the lowest rate of inflation for food since 2006 when our records began. Added to this, we see that consumer confidence is at its highest level since April 2005.
“Fierce competition among grocers has driven food price inflation to record low levels and, with some grocers having announced plans to keep prices down, consumers stand to benefit for a while to come. Sports fans are also doing well this summer with great deals to be found in clothing, footwear and electricals.”
Ms Dickinson added: “The backdrop was equally promising, with stable commodity markets and the continued strength of sterling suggesting inflation is set to remain low in the medium term. Although, of course, a strong pound is not so good for those retailers exporting – one exciting and growing area in British retail.
“However, it is clear that retailers are making sure these positive economic benefits in the home market are being passed on to consumers, while they themselves will cheer on the very low producer price index – an indication of the cost pressures they face.”
Ms Dickinson said that household disposable incomes remain under pressure, with the “squeeze” coming from other areas of the economy, such as leisure and recreational activities. Nevertheless, she said the deflation rates showed now was an “excellent time to go out and find a bargain”.