Shop price index shows deflation for first time in over three and a half years
Shop prices in the UK have fallen for the first time in over three and half years according to figures released by the British Retail Consortium.
The BRC-Nielsen Shop Price Index shows that shop prices fell 0.1% last month after rising 0.4% in April. Food inflation slowed to 2.4% in May from 2.9% in April while non-food reported annual deflation of 1.5% in May accelerating from 1% in April.
BRC director general Helen Dickinson said: “Shop prices fell in May, the first time our measure has shown deflation for over three and a half years. It bears out yesterday’s sales figures, which showed that retailers used a range of promotions and offers to drive demand and shift seasonal stock which didn’t sell well during the prolonged cold snap earlier in Spring.
“Non-food deflation accelerated to its lowest level in almost four years, a reflection of the intense competition to capitalise on improving consumer confidence and the late onset of warmer weather. Widespread discounting in the furniture sector drove strong sales as customers were feeling more positive about making major purchases but still on the hunt for a good deal.”
Never Miss a Retail Update!The BRC said promotional activity was a key factor behind food inflation slowing to its lowest level since June 2010. Prices also benefited from past falls in commodity costs especially for wheat and corn.
Mike Watkins, head of retailer and business insight, Nielsen, said: “With a squeeze on real incomes continuing in 2013, falling shop prices will be welcomed by cash-strapped shoppers. However, with levels of recent consumer spend also being impacted by the weather, there continues to be a dependency by many retailers to use vouchers or coupons to drive footfall. Nevertheless, with food inflation slowing as we finally start summer, the outlook for the next three months is looking much brighter.”
