Shop price deflation deepens in February

Shop price deflation deepened to 0.8 per cent in February, compared with 0.5 per cent January, new figures revealed.

The BRC-Nielsen Shop Price Index showed that non-food prices fell by 2.2 per cent, compared with a month earlier, when they fell by 1.9 per cent. This was the deepest deflation since April last year.

British Retail Consortium chief executive Helen Dickinson (said) said: “Shop prices dipped deeper into deflationary territory in February. 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 past 18 months.

“While it’s good news that earnings and inflation are heading in the right direction for consumers, retailers can expect to see more of the same, tough trading environment over the coming months. With that in mind, it’s imperative we get clarity and a definitive agreement over the next month’s Brexit negotiations around the exact form of the transition arrangements.”

Mike Watkins, head of retailer and business insight at Nielsen, commented: “With structural changes in the non-food retail landscape accelerating, and consumers remaining cautious about discretionary spending, non-food prices are still deflationary.”