Morrisons’ meat gets the chop as food prices fall again

The yield on the benchmark 10-year gilts, which moves inversely to its price, hovered around 0.72 percent mark, the super-long 40-year bond yield remained steady 1.20 percent and the yield on short-term 2-year bond rose 1/2 basis point to 0.140 percent by 09:30 GMT.

Overall sales fell by 0.3 per cent – the biggest month-on-month decline since September 2014, according to data from the British Retail Consortium (BRC) and KPMG.

Food deflation hit a record, with prices down by 1.1 per cent, against 0.8 per cent in the previous two months, while non-food deflation accelerated to 2.5 per cent from 2.2 per cent in July.

Following the referendum favouring Brexit the pound value plunged and retailers are yet to feel the full force of the rising costs.

“Care should be taken in reading too much into August’s lackluster performance”, BRC Chief Executive Helen Dickinson said, noting volatile swings in recent British economic data.

She added: “The fact is that so far little has directly changed for the UK’s consumers as a result of the referendum, so it’s the pre-existing market dynamics that are still driving sales”.

“Given the strength of competition in the market, and if the economy softens in line with predictions, any pass through may be more limited than implied by the exchange rate movement”.

Nielsen’s head of retailer insight Mike Watkins said lower prices than a year ago was “good news” helped keep consumer spend buoyant over summer.

That contrasts with a recent survey of retailers conducted by business lobby group the Confederation of British Industry, conducted between July 27 and August 12, which signaled sales increased after having suffered a steep drop in July in the aftermath of the June 23 vote on continued European Union membership.

The latest consumer confidence figures also showed a post-Brexit recovery, as Britons prove they are determined to carry on shopping rather than save.

That missed expectations for an increase of 1.4 percent following the 1.1 percent decline in July.

Consumer Price Index (CPI) inflation in July was up from 0.5 per cent in June.