June sees deepening of retail price inflation fall

Overall shop prices reported deflation of 2.0 per cent in June, deepening from the 1.8 per cent decline in May.

Non-food deflation fell to 2.8 per cent in June from 2.7 per cent in May while food deflation deepened further in June, falling to 0.8 per cent from 0.3 per cent in May.

British Retail Consortium chief executive Helen Dickinson said: "This month’s figures show overall shop prices falling once again. This extraordinary 38 month run of deflation has undoubtedly been good for consumers.

While it has been driven largely by falling prices for non-food items we have, from time-to-time, seen food in deflationary territory as well."

"While the good news for household budgets continues, prices in store will eventually rise again. However, the time it takes for any price increases to make a re-appearance will depend on a combination of factors including the future value of the pound, commodity prices and any eventual impact of last week’s Brexit vote on input costs.

"That said, there won’t be any instant shocks as any changes will take time to feed through. Continuing fierce competition also means that putting up prices may not be viable for some retailers."

Nielsen head of retailer and business insight Mike Watkins said: "Whilst changes in the economic landscape are anticipated next year, the current focus for the industry is the continued deflationary environment. This is good news for shoppers who benefit from falling prices but is added pressure for retailers as they balance increased costs from the national living wage and investment in multi-channel, with volatile consumer demand."

Following Brexit, garden retail price rises are expected because of changes to exchange rates and other factors.

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