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UK shop prices fell 0.1% in July, dragged down by falls in non-food prices

UK shop prices remained steady in July, marking the second consecutive month of deflation since October 2018.

Shop prices fell 0.1% year on year as headline figures were dragged by a “sharp” 1.2% decline in non-food prices, data from the BRC-Nielsen shop price index covering the period between 1 and 5 July showed.

This was below both the 12 and six-month average price increases of 0.3% and 0.4%.

“Shop prices fell by 0.1% for the second month in a row. Many consumers will be pleased to see the price of non-food products continuing to fall at a steady rate, underlining the stiff competition between retailers that is driving down prices,” BRC CEO Helen Dickinson said.

Meanwhile, food inflation eased slightly with prices up 1.7% compared to 1.8% in June, due in part “to the fall in global food prices” Dickinson added.

Fresh food inflation slowed to 1.2% in July from 1.4% the prior month, with meat marking the only element in the category experiencing price reductions.

Ambient food inflation accelerated to 2.4% from 2.3% in June.

Dickinson added: “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 31 October.”

Nielsen head of retailer and business insight Mike Watkins also said he expects “broadly stable food inflation” for the next few months, as shoppers remain “cautious around their retail spend”.