Shop prices have eased in February, according to the latest British Retail Consortium and Nielsen Shop Price Index, as deflation increased to 0.8% amid easing food price inflation.
This was a deepening of price deflation compared to January, which stood at -0.5%. Overall prices have now been in a deflationary spiral for a consecutive 58 months.
Non-food deflation was the most significant influence in the easing of price rises, decreasing by 2.2%, where in January it had declined by 1.9%.
This was also the deepest level of deflation that the monthly survey has found since April 2017.
Food inflation was reduced by 0.3 percentage points month-on-month, and now stands at 1.6%.
This was mainly due to the slowdown in fresh food inflation to 0.9%, the lowest inflation rate since last September, and a significant fall from the 1.7% that was recorded last month.
The study did find one anomaly, as ambient food prices continued to increase, with an uptick in prices by 2.5%, faster than January’s 2.2% price growth.
Helen Dickinson, chief executive of the BRC, said: “This is a further sign that we have passed the peak on 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 its likely to do little to lift the rate of 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.”
She also warned that retailers can still expect a continuation of the current tough trade environment over the coming months, and that it is imperative that in next month’s Brexit negotiations an agreement is reached on transition arrangements.
She reiterated that clarity in the relationship between the UK and the EU, is central to consumers being able to be have choice and access to an affordable and wide range of goods
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