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Published on November 29th, 2017 | by The GC Team

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Four-year run of shop price deflation “coming to an end”

According to the BRC-Nielsen Shop Price Index for 6-10 November 2017, shop prices decreased at an annual rate of 0.1% in November for a third consecutive month. This is the shallowest deflation rate in the last four years.

  • Non-food price deflation eased in November to 1.1% from 1.5% in October. This is the lowest deflation since May 2013.

Helen Dickinson OBE, Chief Executive, British Retail Consortium, said:

“For the third consecutive month shop price inflation remained static, still teetering on the edge of a return to inflationary territory. November now marks the 55th consecutive month of deflation with the current rate the shallowest in the last four years.

“Meanwhile the forces driving inflation continue to play out differently across the industry. While food inflation has fallen back in line with global prices, non- food deflation is as low as its been for more than three years, as hedging contracts come to an end, and with them retailers’ ability to shield their customers from the currency depreciation.   

“The lower projections for consumer spending that came from the OBR’s downbeat forecast last week, and uplifts in labour costs, conjure up a perfect storm of economic pressures looming over an industry that’s already fiercely competitive. That’s why we were pleased that the Chancellor listened to us and others and brought forward the switch from RPI to CPI indexation on business rates – not the fundamental reform needed but an important step forward which will undoubtedly ease some of the pressure and enable retailers to continue with some investment which would otherwise have been threatened.

“However, against a backdrop of higher import costs and a tightening squeeze on discretionary spending power, the challenges to the industry remain stark. So we will continue to press the Government to put business taxation on a more affordable and sustainable footing and to enable the industry to invest in the digital skills that are needed today and in the future.”

 Mike Watkins, Head of Retailer and Business Insight, Nielsen, said: “Shop price inflation has been increasing in line with the CPI for the last 6 months but the index still tracks below that of UK inflation as a whole, and the peaking of food inflation is a welcome boost to shoppers with Christmas shopping underway. Many inflationary increases are still being absorbed by retailers and are not being passed on to the consumer in the form of higher prices. Nevertheless, the deflation in non-food continues to overshadow the discounting and promotional activity taking place in this channel as consumers become more cautious and look for ways to save on their household bills.” 

 

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