Shop price deflation eases in January

Shop price deflation eases in January
The ease in overall shop prices in January was tempered by growth in food prices.
// January shop prices fell 0.3% compared to a 0.4% decrease in December, according to the latest BRC-Nielsen Shop Price Index
// This is below the 12-month average of 0% and above the 6-month average price decrease of 0.5%
// Non-food prices fell 1.5% in January, the same rate as December, while food inflation accelerated to 1.6% in January, up from 1.4% in December

The rate of deflation in overall shop prices eased in January after it was tempered by the growth in food prices, according to fresh retail inflation data.

The latest BRC-Nielsen Shop Price Index indicates that overall shop prices in January fell by 0.3 per cent compared to a 0.4 per cent decrease in December.

This is below the 12-month average of zero per cent and above the six-month average price decrease of 0.5 per cent.

READ MORE: December discounts were “deeper and began earlier” for retailers

The index showed that non-food prices fell by 1.5 per cent in January, which was the same rate of decrease as in December.

Meanwhile, food inflation accelerated to 1.6 per cent in January, up from 1.4 per cent in December.

While fresh food inflation eased to 0.7 per cent in January, compared to 0.8 per cent in December, ambient food inflation accelerated to 2.8 per cent in January – up from 2.4 per cent in December.

The BRC warned that while shoppers will cheer the fall in non-food prices, grocery prices could rise further due to various reasons.

“Shoppers will cheer as non-food prices fell in January, a continuation of the long-term trend in retail,” BRC chief executive Helen Dickinson said.

“This was tempered by growth in food prices which accelerated to 1.6 per cent, slightly above the six-month average.

“Grocery prices could rise further as last year’s increase in global food prices filters through to British shelves – nonetheless, food prices remain low by European standards.

“Rising costs from business rates, minimum wage increases, and the Apprenticeship Levy continue to put upward pressure on prices.

“When combined with fierce competition across the industry, margins are being steadily squeezed as retailers strive to keep prices low for consumers.

“The government should make good on their promise to reform the broken business rates system, doing their part to secure the vibrant high streets British consumers deserve.”

Nielsen head of retailer insight Mike Watkins said: “There is no inflationary pressure coming from the high street as shoppers remain nervous about spending and discounting continues for many non-food retailers.

“Whilst promotions in supermarkets have returned to more normal levels post-Christmas, the sector remains embattled with fierce price competition which looks set to continue.

“And after a decline in volumes across food retailing last year, the industry will be looking to stabilise sales in the first quarter.”

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