Shop price inflation drops to lowest level in three years
Shop price inflation fell to its lowest rate for three years in January, according to figures released by the British Retail Consortium.
The BRC-Nielsen Shop Price Index for January 2013 shows that overall shop price inflation dropped to 0.6% from 1.5% a month earlier. This was the lowest rate of inflation since November 2009 when it was 0.2%.
While food inflation fell to 4% from 4.1% in the preceding month, non-food prices declined by 1.4% after being broadly flat in December.
The BRC said that the fall in non-food inflation was largely due to retailers offering discounts and promotions and cheaper prices for clothing and electrical goods. Clothing prices were down 7.7% on the year before, their biggest drop in the six years of the survey.
Food inflation was marginally down on the previous month which the BRC said was a reflection of easing commodity costs filtering through and better fresh food prices.
Mike Watkins, head of retailer and business insight at Nielsen, explained: “With the traditional high street January sales being replaced by year-round discounting, it’s 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 4%.
“This is perhaps a positive sign that the industry is managing the impact of any cost inflation coming through the supply chain.”
Helen Dickinson, BRC director general, added: “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.”
