Supermarket wars spark drop in prices

Summer clothing sales and a supermarket price war sparked a fall on shop prices last month, according to new figures.

Prices fell by 1.2% year on year in July, according to the latest British Retail Consortium-NielsenIQ shop price index, following a reduction of 0.7% in June.

Helen Dickinson, chief executive of the British Retail Consortium, said: “The fall in prices was partly due to fierce competition between supermarkets keeping food prices low".

Food prices fell by 0.4% in July, accelerating from a 0.2% decline in the previous month as major supermarket chains continue to compete with the low prices of German discount rivals Aldi and Lidl.

Meanwhile, non-food retailers, which include fashion and homeware firms, saw prices slide by 1.8% in July, following a 1% fall in June.

Ms Dickinson said: "With the reopening of some holiday destinations and other recreational activities, consumers broadened their spending to include more leisure and travel.

"In response, nonfood retailers, particular fashion businesses, have been working hard to keep consumer appetite alive with summer sales. Unfortunately for consumers, low prices may not last forever.

"Recently, retailers have faced huge cost pressures as a result of rising costs of shipping, haulage and petrol as well as frictions from exiting the EU.

"The additional paperwork and physical checks on EU imports in October and January may push prices up in the long term."