The latest BRC-NielsenIQ Shop Price Index shows food deflation was 0.2% this month, compared with 0.3% in May, marking the third month in a row of falling prices.
Fresh food prices fell for the seventh consecutive month, although deflation slowed to 0.7% from 1% in May. Ambient food inflation eased to 0.6%, down from 0.7% the previous month.
Meanwhile, overall shop price deflation accelerated to 0.7% year-on-year in June compared to May’s decrease of 0.6%. However, this is a slower rate of decline than the six-month average of 1.6%.
Non-food deflation accelerated to 1% this month, compared to a fall of 0.8% in May, as high street retailers, particularly those selling clothing, tried to prolong the recent pickup in consumer spending.
However, the BRC’s Chief Executive Helen Dickinson highlighted that costs for retailers and manufacturers are continuing to mount due to global food price increases, Brexit red-tape, Covid-related supply chain disruption, raw commodity shortages, and increased shipping and fuel charges.
She warned that the increasing cost burden could be passed onto the consumer, threatening price rises as the pressure mounts in the months ahead, especially with additional Brexit checks this autumn.
“The Government must help to minimise the cost impact on consumers by ensuring that the new checks and documentation requirements this autumn avoid adding further friction to the import of goods,” Dickinson said.
Mike Watkins, head of retailer and business insight at NielsenIQ, added: “The fact that shop prices remain in negative territory despite the recent rise in CPI is indicative of the competitive retail landscape in the UK and keeping prices low for as long as possible is good news for shoppers.
“However, with four in ten shoppers watching their spending more than they were before the pandemic, this suggests that many millions of households are going to see their budgets squeezed should prices start to rise.”