Shop prices fell again in January but could begin to rise again in the coming months as retailers grapple with growing Budget-related costs.
According to the BRC-NielsenIQ index, shop prices fell 0.7% last month driven by a 1.8% decline in non-food product prices This follows a 1% drop in December shop prices as non-food deflation continued.
BRC CEO Helen Dickinson said “extensive January sales was good news for bargain hunters, with non-food products showing significant discounts, particularly for furniture and fashion”.
Food inflation eased but remained in positive territory, climbing by 1.6% compared to 1.8% the previous month. This represents the lowest rate of uplift since November 2021.
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Dickinson said: “Price cuts and deflation may not last much longer as retailers will soon feel the full impact of £7bn of new costs announced at the last Budget. Higher employer NICs, increased National Living Wage, and a new packaging levy mean that prices are expected to rise across the board.
“Government can help to mitigate the impact on consumers by ensuring its proposed reforms to business rates do not result in any store paying more in rates than they already do. Without action, UK households will feel the effects.”
NielsenIQ head of retailer and business insight Mike Watkins added: “Shoppers continue to be unsure about spending and many are seeing a continued squeeze on their household incomes.
“So we expect non-food retailers to still promote and food retailers to still offer price cuts over the next few weeks, with shoppers managing their budgets by shopping smart and shopping around for wherever the savings are the most attractive.”
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