According to data, summer reductions by fashion merchants hoping to clear out overstock contributed to store prices seeing their first yearly decline in over three years.

The British Retail Consortium (BRC) reports that prices decreased by 0.3% in August compared to the same month last year, which is the lowest pace since October 2021.

Non-food items like apparel and furniture, which merchants were willing to mark down in response to sales being impacted by the rainy weather and ongoing cost of living concerns, were the main drivers of the price decline.

Although at a reduced rate, food costs are still rising, according to the BRC trade association.

It said that because supplier prices had dropped, fresh food inflation—such as fruit, meat, and fish—had experienced its largest monthly decline since December 2020.

According to the BRC, non-food item prices decreased 1.5% in August compared to the same month last year. Although food prices increased by 2%, they were less than the 2.3% increase in July.

Even though consumers will be "happy" to see the costs of some commodities reducing, there is no assurance that this trend will continue, noted BRC Chief Executive Helen Dickinson.

According to the most current official statistics on inflation, which show how quickly prices are growing overall, the rate increased to 2.2% in July for the first time this year.

The increase in July was expected, given gas and electricity costs dropped less than they did the previous year.

According to the Bank of England's forecast, the inflation rate would peak at around 2.75% in the next months and then drop below 2% in the following year.

The primary cause of 2022's high inflation was a precipitous increase in energy costs. Following the Covid epidemic, there was an increased demand for gas and oil, and prices increased once again when Russia invaded Ukraine.

The Bank of England thought it was appropriate to lower interest rates to 5% from 5.25% earlier this month, marking the first reduction since the recession began in March 2020, because of the recent slowing in inflation.

But at the time, Andrew Bailey, the governor of the Bank, stated that it was important "to make sure inflation stays low and be careful not to cut interest rates too quickly or by too much".

(Sources: investing.com, reuters.com)