Retail price inflation slows

Overall shop prices reported deflation of 1.0% in February, a sharp deceleration from the 1.7% fall in January.

In the DIY, gardening and hardware category, February was down -1.4% on February last year but up 0.1 % on last month.

In the category, prices are down -1.9% on last year overall.

British Retail Consortium chief executive Helen Dickinson said: "Shop prices in February were 1 per cent lower than the same month last year, continuing a trend of year-on-year price falls that has lasted nearly four years.

 "However, it is clear that the significant underlying cost pressures, which have been building over the last year are beginning to filter through into shop prices. Global food prices were on average 16 per cent higher at the beginning of this year compared to last, whilst over the same period the value of the pound fell around 15 per cent. Despite this, February saw an increase of just 0.4 per cent in the prices of food sold in shops; proving retailers’ resilience in managing to largely shield consumers from cost increases.

 "For the time being, consumers continue to benefit from an annual fall in non-food prices, which were down 1.8 per cent on the previous year. However, the rate of deflation has eased considerably from a monthly perspective, which can be explained in part by an end to the promotional activity in January, after a weak festive sales performance in some non- food categories. 

 "Looking further ahead, retailers, who operate in a highly competitive market with narrow margins, will be increasingly hard pushed to protect their customers from the inevitable impact of these rising cost pressures. We can therefore expect this impact to start manifesting in shop prices over the course of the year."

Nielsen retailer and business insight head Mike Watkins said: "Whilst food inflation has returned, the competition between retailers means that price increases passed onto consumers in February were relatively small, and there were also some seasonal and weather related increases. Non-food prices remain deflationary and in part this reflects the structural change underway in non-food retailing. At the moment consumer sentiment around spending intentions is strong so we don’t anticipate any significant change on retail spend over the next few months even if shop price inflation gains more momentum."

 


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