Shop prices drop for the first time in almost three years

Summer sales have helped drive down shop prices, marking the first annual drop in nearly three years.

The British Retail Consortium (BRC) found that prices in August were 0.3% lower compared to a year ago, the lowest rate since October 2021.

That’s mainly because of a drop in the prices of non-food items, like clothing and furniture, as shops offered discounts to encourage people to spend money despite the wet weather.

While food prices continued to rise, their pace slowed. The BRC noted that fresh food prices, including fruit, meat, and fish, fell more than they had in over three years, thanks to lower costs from suppliers.

The BRC reported that non-food items were 1.5% cheaper in August compared to a year ago. Food prices rose by 2%, but this was down from July's figure of 2.3%.

Helen Dickinson, BRC’s chief executive, said that while households will be happy to see prices falling, this trend isn't guaranteed to continue. She said there’s still uncertainty around prices because of climate change and political tensions, which could lead to further inflation-related pressures in the coming year.

The latest official inflation figures, which measure the overall rise in prices, showed a slight increase to 2.2% in July. This rise was mostly due to a smaller drop in gas and electricity prices compared to the previous year.

The Bank of England has predicted that the inflation rate will reach around 2.75% in the coming months before falling below 2% next year. The recent slowdown in inflation allowed the Bank to cut interest rates to 5% from 5.25% earlier this month, marking the first reduction since the start of the pandemic.

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