By C. Perera, JadeTimes News
Summer Sales Drive First Annual Price Drop in Nearly Three Years, Research Shows
Fashion retailers slashed prices during summer sales in an effort to clear stock, contributing to the first annual decline in shop prices in almost three years, according to research. The British Retail Consortium reported that prices in August fell by 0.3% compared to the previous year, marking the lowest rate since October 2021.
The drop in prices was mainly driven by non food items like clothing and furniture, as retailers offered significant discounts after wet weather and the ongoing cost of living crisis dampened consumer spending. While food prices continued to rise, the pace of inflation slowed, with fresh food prices, particularly for fruit, meat, and fish, experiencing the biggest monthly decline since December 2020 due to lower supplier costs.
The BRC highlighted that non food retailers had been offering steep discounts to shift unsold summer stock, especially in fashion and household goods, following a challenging season impacted by unfavorable weather and financial pressures on households.
In August, the prices of non food goods were 1.5% lower than a year earlier, while food prices were up by 2%, down slightly from July's increase of 2.3%. BRC Chief Executive Helen Dickinson noted that although households would welcome the price reductions, it remains uncertain whether this trend will continue, given the unpredictable nature of commodity prices due to climate change and rising geopolitical tensions.
Investment strategist Lindsay James of Quilter Investors told the that the wet summer had severely affected clothing sales. While there are encouraging signs of inflation being brought under control, she cautioned that the recovery remains fragile.
Recent official inflation data revealed that the rate increased to 2.2% in July, marking the first rise this year. The Bank of England has forecast that inflation could rise to around 2.75% in the coming months before falling below 2% next year. Despite the slowdown in inflation, the Bank of England recently cut interest rates from 5.25% to 5%, its first reduction since the pandemic began in March 2020. However, Bank Governor Andrew Bailey emphasized the importance of maintaining low inflation and avoiding premature or excessive rate cuts.
Andrew Murphy, CEO of The Entertainer, a UK based toy retailer, stated that some cost pressures from the past 18 months had begun to ease slightly. However, he noted that wage increases, driven by a 10% rise in the national living wage this year, remained a significant ongoing challenge.
