New data from the British Retail Consortium (BRC) has shown that retailers have not yet been able to raise their prices in the aftermath of ‘freedom day’.
The sector will be hoping that footfall and sales volumes will return to pre-pandemic levels or better, allowing stores to raise their prices once more.
However, retailers are still having to opt for lower prices in order to entice shoppers, the data suggests.
Shop price deflation accelerated to 1.2% year-on-year in July compared to June’s decrease of 0.7%.
This is a slower rate of decline than the 12- and 6-month average price decreases of 1.6% and 1.4%, respectively.
Helen Dickinson, chief executive of the British Retail Consortium, commented: “UK consumers will be pleased to see another month of falling prices at the checkout.
“Annual prices in July fell at a faster rate than the previous month due to fierce competition between supermarkets keeping food prices low, and the steeper fall in non-food prices.
“With the reopening of some holiday destinations and other recreational activities, consumers broadened their spending to include more leisure and travel.
“In response, non-food retailers, particular fashion businesses, have been working hard to keep consumer appetite alive with summer sales.
“Unfortunately for consumers, low prices may not last forever. Recently, retailers have faced huge cost pressures as a result of rising costs of shipping, haulage and petrol as well as frictions from exiting the EU.
“The additional paperwork and physical checks on EU imports in October and January may push prices up in the long-term.
“Government should do all it can to minimise the impact on consumers by reducing any further frictions and costly delays where it can.”
Mike Watkins, head of retailer and business insight at NielsenIQ, added: “It’s an uncertain time for many households as the economy slowly reopens and recent NielsenIQ research shows 41% of all shoppers are watching their spend more than they did before the pandemic.
“So, it’s important that retailers continue to keep prices low especially as the increase in CPI is likely to lead to different shopping behaviours to help pay for the other increases in household spend.”