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Published on July 7th, 2017 | by The GC Team

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Shop prices near end of four-year downward trend

UK shop prices recorded the shallowest deflation rate since November 2013, decelerating slightly by 0.3% in June from a 0.4% fall in May but edging closer to ending a four-year deflationary trend.

Deflation in the non-food sector was 1.4% compared to 1.5% in the previous month, while food prices increased on average by 1.4%, the same rise as in May and the highest since January 2014.

Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said the year-on-year numbers belie the fact that prices have been heading upwards for the last six months. “It’s just that significant deflation in the second half of 2016 means there has been considerable ground to make up in the year-on-year figures,” she commented.

“The steadying of inflation in June is likely a brief hiatus resulting from the interplay of short-term influences on pricing, such as good weather delaying mid-season promotions into June and the longer term competitive pressures constraining the pass through of all costs. We expect shop price inflation to continue trending upwards in coming months.

“The reality is that cost pressures faced by retailers continue to mount. These pressures arise both from market-driven increases in the underlying cost of goods and as a result of Government policies. There is a limit to the ability of retailers to protect consumers by absorbing these impacts into their margins, as a result further price increases are inevitable.”

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