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Shop price inflation at lowest level for over 3 years

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Shop price inflation fell to its lowest rate in over three years last month as retailers continue to use discounts and promotions to woo customers, according to data released today.

Overall shop price inflation fell to 0.6 per cent last month, down 0.9 per cent on a month earlier and closing in on November 2009’s inflation rate of 0.2 per cent.

Following a broadly flat end to 2012, non-food prices fell 1.4 per cent in January as weak demand for clothing forced retailers to slash prices, according to the British Retail Consortium (BRC)-Nielsen Shopper Price Index.

Clothing prices decreased by 7.7 per cent on the same period a year earlier, their greatest drop since the survey began six years ago, though this did nothing to curtail the worst fall in clothing sales since last Easter.

Mike Watkins, Head of Retailer and Business Insight at Nielsen explained that the growing trend for discounting has affected non-food inflation.

He said: “With the traditional high street January sales being replaced by year-round discounting, its no surprise to see a continuation of deflation in non-food, particularly in clothing and footwear where half-price reductions have been used to attract shoppers post-Christmas.

“For food retailers, despite seasonal promotions coming to an end, food inflation has remained steady at around four per cent.

“This is perhaps a positive sign that the industry is managing the impact of any cost inflation coming through the supply chain.”

Food inflation fell 0.1 per cent to four per cent in January and the BRC’s Director-General Helen Dickinson anticipates that food prices should remain stable in the months ahead.

“Food inflation was marginally down on the previous month, a reflection of easing commodity costs filtering through and better fresh food prices.

“There is some volatility in the system but, barring any major shocks in the supply chain, I still expect stable food inflation as the year goes on.

“Overall shop price inflation is at its lowest since November 2009, helping counter much bigger increases in other household costs which are undermining customers’ spending power.

“With consumer confidence creeping up, retailers will be hoping for an increased willingness to buy more than just immediate needs.”

Published on Wednesday 06 February by Editorial Assistant

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