Price rises are here to stay
Shop price inflation accelerated this month to 0.8 per cent from 0.4 per cent in April, according to the latest BRC- Nielsen Shop Price Index.
This is above the 12- and six-month average price increases of 0.2 per cent and 0.6 per cent respectively.
Non-Food prices increased in May by 0.2 per cent and this is the second month of Non-Food inflation in 2019, in contrast to the past six years of deflation.
The driver behind the May acceleration in shop price inflation was growth in Non-Food prices. In addition, the deep deflation in Electricals and Clothing put downward pressure on Non-Food prices.
Helen Dickinson OBE, Chief Executive, British Retail Consortium, commented: “Shop Price growth in May was the second highest rate in the last six years, though it remains well below headline inflation. The forces driving inflation continue to play out differently across the industry. Electricals and Clothing have seen greater technological disruption and more intense competition, putting downwards pressures on prices.
“Rising costs associated with currency depreciation, stockpiling, rising minimum wage and the Apprenticeship Levy, have all put upwards pressure on prices for a while, and it now appears that retailers cannot absorb them any longer. Unless the Government addresses future cost rises, including spiralling business rates, we may see larger price rises in the future.”
Mike Watkins, Head of Retailer and Business Insight, Nielsen, added: “Inflation has returned to Non-Food but consumers remain cautious and there is intense competition on the high street. With Non-Food retailers facing uncertain levels of demand, price discounting could quickly return if demand weakens over the next few months.”