2024-08-27 10:34:04
Getty ImagesFashion retailers’ summer sales to clear inventory led to the first annual fall in store prices in nearly three years, research shows.
Prices fell 0.3% in August from the same period last year, the lowest level since October 2021, according to the British Retail Consortium (BRC).
The price falls were driven mainly by non-food items such as clothing and furniture, with retailers offering discounts as rainy weather and continued cost-of-living pressures hit sales.
Food prices continued to rise, but at a slower pace, industry body the BRC said.
It said inflation for fresh food such as fruit, meat and fish saw its biggest monthly fall since December 2020 due to lower supplier costs.
But the British Retail Consortium said non-food retailers had been “discounting heavily to clear summer stock, particularly fashion and homewares”.
“The discount offer comes as trading has been difficult this summer due to poor weather and the ongoing cost of living squeeze affecting many households.”
The BRC said non-food prices fell 1.5% in August from a year earlier. Food prices rose 2%, but that was down from 2.3% in July.
BRC chief executive Helen Dickinson said while households would be “pleased” to see prices fall on some goods, there was no guarantee the trend would continue.
“The outlook for commodity prices remains uncertain due to the impact of climate change on domestic and global harvests, as well as rising geopolitical tensions,” she said.
“As a result, we may see inflationary pressures pick up again next year.”
Lindsay James, investment strategist at Quilter Investors, said the wet summer weather did hurt apparel sales.
She told the BBC’s Today programme that while there were “encouraging signs that inflation is coming under control”, the data was also a “reminder that the recovery remains fragile”.
The latest official inflation figures, which show how fast overall prices are rising, show that The interest rate rose to 2.2% in July, the first increase this year.
July’s price increase had been widely predicted as gas and electricity prices fell less than a year earlier.
The Bank of England predicts that inflation will rise to around 2.75% in the coming months and fall below 2% next year.
The surge in inflation in 2022 is mainly due to a sharp increase in energy prices. Demand for oil and gas increased after the outbreak of the coronavirus, while prices surged again after Russia’s invasion of Ukraine.
The recent slowdown in inflation means Bank of England says it can cut interest rates to 5% from 5.25% Earlier this month, the Federal Reserve announced a rate cut, the first since the outbreak of the epidemic in March 2020.
However, central bank governor Andrew Bailey said at the time the central bank needed to “ensure inflation remains low and be careful not to cut interest rates too quickly or too much”.
Andrew Murphy, chief executive of toy retailer The Entertainer, which has 165 stores in the UK, told the BBC that cost pressures faced by the company over the past 18 months “have begun to ease a little”.
However, he added that the biggest cost not related to buying products is wages, which have risen by about 10% this year and “will continue to grow” due to increases in the national living wage.
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