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UK Shop Prices Decline Most Since 2007, BRC Says

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Shop price inflation in the UK declined in June at the fastest pace since February 2007 as volatile weather pushed down non-food costs, the British Retail Consortium (BRC) said in a report on Wednesday.

The BRC-Nielsen shop price index declined 0.2 percent year-on-year in June, the biggest fall since February 2007. This followed a 0.1 percent drop in May. Prices fell for a second consecutive month.

Non-food prices decreased 1.9 percent annually in June, faster than a 1.5 percent drop in May. Food inflation, meanwhile, increased to 2.7 percent in June from 2.4 percent in May.

"The deflation is driven entirely by non-food, a reflection that the summer sales are well underway as retailers battle it out to shift stock and compete for customer spending," BRC Director-General Helen Dickinson said.

"The volatile weather also had a part to play in pushing down non-food prices," Dickinson added. Sales of clothing, footwear, furniture, do-it-yourself goods, which saw sharp discounting, were the hardest hit during the lingering cold snap.

A recent survey by GfK NOP revealed that confidence among British consumers rose to its highest level in just over two years in June with the households' perceptions of the general economic situations improving.

Official data released last month showed that retail sales rebounded strongly in May, led by food sales. However, purchasing power is still being stifled by low earnings growth and inflation.

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