Non-food retail prices dipped by 0.1% in the four days between 3 to 7 July, staying mostly static compared with a 1.4% decrease in the previous month.
Overall shop price inflation inched up 0.4%, increasing on deflation from 0.3% in June, according to the British Retail Consortium (BRC) and Nielsen Shop Price Index.
BRC chief executive Helen Dickinson said: “The lack of upward movement in non-food inflation may seem surprising, given the size of the currency depreciation last year and the public attention given to price increases of some products.
“However, while in many cases retailers’ new ranges are coming in at higher price points in response to the increased cost of importing goods, other core products are seeing reductions in prices, as retailers compete to keep prices low for consumers where they can.”
However, Dickinson added that she expects non-food prices will move towards inflation as “strong upward pressures” remain, pointing out that “protection from hedging contracts” are set to expire as autumn approaches.
“Notwithstanding pressures on shop prices, further increases in inflation in other areas of the consumer spending basket are likely in coming months. That will put UK households’ already squeezed finances under increasing strain,” she added.
Nielsen head of retailer and business insight, Mike Watkins, said: “The amount of inflationary pressure coming from retail remains less than from other elements of the economy and in the last few weeks, whilst we have seen a return to more normal weather, the level of consumer demand remains unpredictable.
“[This] means retailers are cautious about passing on price increases, in particular at key retail price points. So promotional activity is still an important stimulant of demand as consumers become more cautious in the face of higher living costs.”