Price-conscious consumers and fears of rising interest rates have led British retail prices to dip 1.8% in June, the deepest decline since December 2006. According to the British Retail Consortium (BRC), retail spending saw its lowest growth rate since May 2011, just 0.6% higher than the year before.
Food prices saw slight gains of 0.6%, however, non-food prices fell a record 3.4% in June from 2.8% in May.
Reuters reported that consumer spending has been a major driver of Britain’s unexpectedly strong economic recovery over the past year, but in May the Bank of England (BoE) said it expected the rate of growth to fall slightly in the second half of 2014. June also saw increased speculation that the BoE would raise interest rates from their record low 0.5% later this year.
While retailers are grappling with dialed down sales, the consortium saw consumer confidence at its highest level since April 2005, despite lackluster wage increases and shrinking disposable incomes.
BRC director general Helen Dickinson said, “June saw plenty of good news for cash-conscious customers, and confirms that retailers have continued to work hard to help budgets go that bit further over the summer.” She added that sports fans did particularly well in June snapping up deals in the clothing, footwear and electronic sectors.