In the UK, shop prices have dropped for the first time since the cost of living crisis began nearly three years ago. Data from the British Retail Consortium-NielsenIQ shop price index showed a 0.3% decrease in prices in the first week of August compared to the same period last year. This decline was driven by a fall in prices of non-food products, as retailers offered discounts to shift unsold summer stock. Clothing, footwear, and electronics were among the most heavily discounted products, with demand weakening.
Food inflation eased in August, with fresh food prices, especially fruit, meat, and fish, seeing the biggest monthly decrease since December 2020. However, food prices still increased by 2% compared to the previous year, with shelf-stable foods rising by 3.4% and fresh foods dropping by 1%. Despite the positive news of price deflation, uncertainty remains as the effects of climate breakdown on harvests and conflicts in the Middle East and Ukraine could push up costs of goods and fuel, leading to potential price increases in the future.
The Bank of England expects the consumer prices index measure of inflation to continue rising and peak at around 2.75% before falling. There is speculation that the Bank could cut interest rates again when its monetary policy committee meets in September, following a recent cut from 5.25% to 5%. The ONS reported that annual inflation rose to 2.2% in July, linked to domestic energy bills which fell by less last month compared to July 2023. Retailers are working hard to keep prices down, but the future remains uncertain due to external factors impacting costs.
Source
Photo credit www.theguardian.com
