Heavy discounting by food and furniture retailers helped shop prices fall for the 26th consecutive month in June, according to an industry survey.
Prices fell 1.3% on average as retailers passed on lower food and commodity costs to attract hard-pressed consumers in search of bargains.
The only boost to prices came from rising oil costs, which have moved up from a low point earlier this year. This helped moderate the shop price slump in June following a fall of 1.9% in May, said the British Retail Consortium (BRC).
The BRC’s director general, Helen Dickinson, said the biggest price falls were in the furniture and DIY sectors, fuelling a near 2% drop in non-food prices.
“Shoppers wishing to invest in their home won’t be disappointed, with great deals to be found in furniture and flooring and gardening and hardware in particular,” she said.
Food prices declined 0.4%, as bumper food harvests around the world cut the cost of basic foodstuffs. Popular agricultural commodities maintained a long decline, led by soya beans, sugar and wheat, which all reported a double-digit slide over the last year, falling 34%, 24% and 14% respectively
This situation is expected to reverse following forecasts that the US will suffer poor harvests later this year with heavy rain expected to hinder wheat and soya bean planting.
Dickinson said shops might enjoy an even better July, after consumer confidence hit a 15-year high, suggesting that shoppers could feel more comfortable about buying major purchases.
“It also suggests that consumer spending, one of the main drivers of the recovery, should remain robust over the summer,” she said.
“We’re seeing a strong appetite for consumer credit, inflation remains at an historic low, unemployment continues to fall and wages have started to rise, the wider macro-economic data continues to be supportive for the consumer.’’
But several high street chains have begun summer sales with discounts of up to 75%, signalling that shoppers remain careful with their cash. H&M cut prices by up to 75%, while JD Sports is offering up to 50% off.
Mike Watkins, retail expert at researcher Nielsen, said: “Retailers continue to use price cuts and promotions to stimulate sales, which is helping to maintain shop price deflation, and we see little evidence to suggest that prices will rise in the near future.
“With many food retailers still using price cuts to attract new shoppers, this is lowering the cost of the weekly shop and so the overall CPI figure in the UK. Deflation and price led competition will continue to be a key driver of sales growth for some time yet,” he said.
