Non-food shop prices continue to drop in the UK

By

Barbara Santamaria

Published
Feb 28, 2018

Non-food retailers continued to drop prices in February as the competitive and challenging market conditions made it difficult for firms to pass on inflationary costs to consumers.

According to the latest BRC – Nielsen Shop Price Index, deflation in non-food prices deepened in February, decreasing by 2.2% compared to the previous month when prices declined by 1.9%. This is the deepest deflation since April 2017.

Overall shop prices fell by 0.8% in February from 0.5% in January, while food inflation improved to 1.6% from 1.9% in the first month of the year.

The British Retail Consortium said the decrease in prices will be good news to cash-strapped consumers, however retailers should expect to see the same tough trading environment continue over the next months.

“This is a further sign that we have passed the peak of the upward pressure on inflation caused by the fall in the pound in June 2016. This will ease the squeeze on consumer incomes over the coming year, but it’s likely to do little to lift the rate of growth in consumption. Earnings are still falling in real terms, despite wages increasing, and savings are unlikely to provide the same support to spending that they have over the last 18 months,” commented Helen Dickinson, chief executive of the trade association.

“While it’s good news that earnings and inflation are heading in the right directions for consumers, retailers can expect to see more of the same, tough trading environment over the coming months,” she said, adding that the sector needs more clarity about Brexit and its implications for retailers during the transition.

“Both the transition and the UK’s future relationship with the EU will determine how we maintain consumers’ current access to a diverse choice of affordable goods,” she concluded.