By Matteo Castia

U.K. retail prices fell more sharply in the first week of July due to fierce competition between supermarkets and a steeper drop in nonfood prices, according to the latest report by Nielsen IQ and the British Retail Consortium released Wednesday.

Prices at U.K. stores dropped 1.2% year-on-year between July 1 and July 7, compared with a decline of 0.7% in June, the report found.

Nonfood prices declined faster than food prices, falling 1.8% on the year, compared with a 1.0% decrease in June. Food prices fell 0.4% in the period, doubling up on June's 0.2% drop.

"With the reopening of some holiday destinations and other recreational activities, consumers broadened their spending to include more leisure and travel. In response, non-food retailers, particular fashion businesses, have been working hard to keep consumer appetite alive with summer sales," BRC Chief Executive Helen Dickinson said.

However, low prices may not last much longer, as costs related to shipping, gas, Brexit tape and haulage continue to mount, Ms. Dickinson said.

"The additional paperwork and physical checks on EU imports in October and January may push prices up in the long-term," she said.

Write to Matteo Castia at matteo.castia@dowjones.com

(END) Dow Jones Newswires

July 28, 2021 02:14 ET (06:14 GMT)

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