Retailers contain effect of VAT increase
Overall shop price inflation up 2.3 per cent in January.
Food inflation slowed to 2.9% in January from 3.7% in December as non-food inflation accelerated to 1.9% in January from 1.4% in December.
Stephen Robertson, British Retail Consortium Director General, said: “January’s VAT increase was lost among a huge number of discounts and promotions. We would have expected non-food inflation to be higher because of the VAT rate reversal, but many shops held off passing the extra costs onto their customers.
“Fierce competition, in the face of weakening consumer demand and uncertainty about the recovery, is keeping shop prices down.
“Food inflation slowed for the first time since August 2009. It’s now only a third of last year’s high. This has largely been driven by a slowdown in fresh food inflation, particularly for meat and milk. But the cost of commodities, such as sugar and coca, has significantly increased in the past year which will put upward pressure on food inflation if it continues.”
