Market Analysis

British shop prices declined in annual terms this month for the first time since October 2021, driven by summer discounts on clothing and household goods, according to a survey released on Tuesday.

The British Retail Consortium (BRC) reported that shop prices dropped by 0.3% in August compared to the same period in 2023, following a 0.2% rise in July.

Non-food goods saw a price decrease of 1.5%, marking the largest drop in over three years, while food prices rose by 2.0%. This was a slowdown from the 2.3% increase in July, and it represented the smallest rise since November 2021.

"Shop price inflation eased further in August as many non-food retailers maintained promotional activities due to unpredictable weather," said Mike Watkins, head of retailer and business insight at market research firm NielsenIQ, which compiles the data.

"Food retailers also introduced more price cuts to boost sales during the 'summer of sport'," Watkins added, referencing the Paris Olympics and the men’s Euro 2024 soccer tournament.

The BRC survey was conducted on prices at major retail chains between August 1 and August 7.

The most recent official measure of annual consumer price inflation (CPI), which includes both services and goods, increased for the first time this year in July, rising to 2.2% from 2.0%.

The Bank of England (BoE) anticipates CPI inflation will reach around 2.75% by the end of the year, as the impact of significant energy price drops in 2023 diminishes. The BoE expects inflation to return to its 2% target in the first half of 2026.

Earlier this month, the BoE reduced interest rates from their 16-year high, and investors anticipate at least one more quarter-point cut before the end of the year.

Paraphrasing text from "Reuters" all rights reserved by the original author.