(Reuters) – British shop prices fell year-on-year this month for the first time since October 2021, reflecting summer sales on clothes and homewares, a survey showed on Tuesday.

According to the British Retail Consortium, shop prices fell by 0.3% in August compared to the same month in 2023, following a 0.2% increase in July.

Non-food prices fell by 1.5%, the largest decline in just over three years, while food prices rose by 2.0%, slowing from July’s 2.3% increase and marking the smallest increase since November 2021.

“Store price inflation fell again in August as many non-grocers maintained special offers due to unpredictable weather,” said Mike Watkins, head of retail and business insights at research firm NielsenIQ, which compiles the data.

“Grocery retailers have introduced further discounts to boost sales during the ‘Summer of Sport,'” Watkins added, referring to the Paris Olympic Games and the 2024 European Men’s Football Championship.

The BRC survey covered prices in major retail chains between August 1 and 7.

The latest official reading of annual consumer price inflation, which includes both services and retail goods, rose from 2.0% to 2.2% in July for the first time this year.

The Bank of England expects consumer price inflation to reach around 2.75% by the end of the year as the impact of the sharp fall in energy prices fades in 2023. Inflation will then return to the BoE’s target of 2% in the first half of 2026.

The BoE cut its benchmark interest rate from a 16-year high earlier this month, and investors are expecting at least another quarter-percentage point cut by the end of the year.

(Reporting by Andy Bruce; Editing by William Schomberg)