Shop prices edge up in January

Shop price inflation nudged up in January to 0.4 per cent, from 0.3 per cent in December, the fourth consecutive month of price increases and the highest inflation rate since April 2013.

Non-food deflation continued to decelerate, with prices falling by 0.3 per cent in January, compared to the 0.4 per cent decline in December – the lowest rate of deflation since March 2013.

The latest British Retail Consortium (BRC) and Nielsen figures also revealed that food inflation was steady at 1.5 per cent in January, fresh food inflation rose to 1.2 per cent in January - up from 0.9 per cent in December - and ambient food inflation slowed to 1.9 per cent in January, down from 2.3 per cent in December.

The lower rate of deflation for Non-Food goods reflects in part less heavy discounting this January compared to January 2018 for some goods, such as furniture and clothing, or some price increases for others, such as DIY or health and beauty goods. In these latter sectors of retail, prices have started rising mid-2018, with the BRC stating it expects non-food prices to edge towards inflationary territory for the next couple of months.

BRC chief executive Helen Dickinson commented that despite significant post-Christmas discounting, shop prices in January were slightly up on last year.

“Promotions have become the norm in recent years, but it was never going to be possible to continue making seasonal price cuts deeper each year; especially given that the cost of importing many of the goods we buy increased with the post-referendum fall in the pound.

“Consumers have little to fear in terms of inflation over the coming months with many of the underlying pressures on prices easing,” she continued, adding: “That is unless the UK leaves the EU without a deal on 29 March, leading to increases in the price of many goods in the weekly shopping basket.”

Mike Watkins, head of retailer and business insight at Nielsen, concluded: “The retail outlook is for low growth over the next couple of months and for shop price inflation to remain at around current levels, and less than CPI.”

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