Consumers continued to benefit from falling shop prices in August, as overall prices fell 2% from the 1.6% decline in July.
The latest British Retail Consortium (BRC) and Nielsen Shop Price Index revealed the fall in prices was driven by non-food deflation, which accelerated to 2.5% during the month – from 2.2% in July.
Mike Watkins, head of retailer and business insight at Nielsen, said: “With unpredictable weather and a change to consumer sentiment underway, we have seen retailers cut prices or increase promotional activity in the last few weeks to help top line sales growth, so it’s of no surprise that shop price deflation is lower in July than in any other month this year.”
Despite this, Britain’s decision to leave the EU could put pressure on retailers to increase their prices. Helen Dickinson, chief executive of the BRC, said: “The devaluation of sterling in wake of the referendum will put upward pressure on shop prices.”
However, she said that’s likely to take several months to “properly” feed through as retailers won’t feel the cost increases until existing contracts with foreign suppliers come to an end.
“Even then, retailers will have to make a decision about when and how much to pass onto consumers,” she added.