UK inflation rose to 0.6% in July – its highest level recorded since November 2014 – according to the first set of post-Brexit figures.
Slowly increasing prices in the first half of the year have cost British households £1.4 billion – or almost £55 per household – compared to a year ago, with rising fuel costs being a big contributor.
But despite inflation, sustained cuts to supermarket prices are a sign of the continuing price wars between the UK’s four major supermarkets, and discounters Aldi and Lidl. Prices have fallen by over 2.6% since the start of the year, and Asda’s place as the cheapest supermarket reflects its sustained effort to undercut the discount retailers and remain the UK’s cheapest supermarket.
The food and beverage sector provided “the largest downward pull” on prices in July, the Office for National Statistics said, though its contribution to the consumer price index over the last 12 months is slightly reduced from that of the year before.
Mark Billige of pricing specialist Simon-Kucher said: “We have now seen more than two years of falling year-on-year prices for food and non-alcoholic drinks, and this month was no exception, indicating the fierce supermarket price war still rages on. Since January prices have decreased by more than 2.6%, saving shoppers more than £50 per household compared with flat prices.
“Research by Which? showed that Asda led the price war this month by having the cheapest prices, which follows their indication last month that it will prioritise volume over profit. The hope for UK households will be that the supermarkets’ battle to keep customers and protect market share will mean that they will be willing to swallow any future cost increases coming from rising post-Brexit import costs.”
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