Food inflation slowed to 2% in August 2024. Credit: Billion Photos/Shutterstock.

UK shop prices experienced deflation for the first time in nearly three years in August 2024, according to the latest figures from the British Retail Consortium (BRC) and NielsenIQ.  

The data indicates a 0.3% deflation – a shift from the 0.2% inflation observed in July. 

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The BRC’s report highlights that this deflation is below the three-month average rate of 0%, marking the lowest shop price annual growth since October 2021.  

During August 2024, food inflation has also decelerated 2% compared to 2.3% in July.

The deceleration is more pronounced in the fresh food category, where inflation slowed to 1% in August, down from 1.4% in July, and below the three-month average rate of 1.3%.  

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This represents the lowest rate since October 2021.  

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Ambient food inflation has decreased to 3.4% in August from 3.6% in July, the lowest rate since March 2022 and below the three-month average rate of 3.7%. 

Non-food items continued to see deflation, falling further to -1.5% in August from -0.9% in the preceding month – below the three-month average rate of -1.1%.  

This is the lowest inflation rate for non-food items since July 2021. 

BRC chief executive Helen Dickinson said: “Shop prices fell into deflation for the first time in nearly three years. This was driven by non-food deflation, with retailers discounting heavily to shift their summer stock, particularly for fashion and household goods. This discounting followed a difficult summer of trading caused by poor weather and the continued cost of living crunch impacting many families. 

“Retailers will continue to work hard to keep prices down, and households will be happy to see that prices of some goods have fallen into deflation. The outlook for commodity prices remains uncertain due to the impact of climate change on harvests domestically and globally, as well as rising geopolitical tensions. As a result, we could see renewed inflationary pressures over the next year.”