U.K. shop prices fell by a record in July, indicating inflation pressure remains subdued as Bank of England officials begin their monthly policy meeting.
The British Retail Consortium said today prices at stores fell an annual 1.9 percent, the most since the series began in 2006. Food-price inflation slowed to a record-low 0.3 percent from 0.6 percent.
“This is great news for households who are benefiting from fierce competition within the industry,” said BRC Director General Helen Dickinson. “Against a backdrop of stable commodity markets, the stronger sterling making imports cheaper and wavering retail spending, current levels of deflation are expected to continue.”
Consumer-price inflation is below the BOE’s 2 percent target, and all 47 economists in a Bloomberg News survey forecast the BOE will keep its key interest rate at a record-low 0.5 percent when it announces its decision tomorrow. The MPC will have new economic and inflation forecasts at the meeting, which it will publish later this month.
The BRC said a further slowdown in inflation would support consumer spending and “strengthen the case for keeping official interest rates on hold until the second half of next year.”