BRC: Shop price inflation fell to 0.6% in January

Overall shop price inflation fell to 0.6% in January from 1.5% in December, the lowest shop price inflation since November 2009 when it was 0.2%.

Food inflation fell to 4.0% in January from 4.1% in December.

Non-food prices fell 1.4% in January after being broadly flat in December.

Helen Dickinson, British Retail Consortium Director General, said: "The significant year-on-year fall in non-food prices was driven by cheaper clothing and electricals. Promotions were not as widespread as last year, a higher proportion of goods was sold at full price boosting sales figures but, where discounts were applied, they were deeper. Offers are common at this time of year, as retailers clear stock to make way for spring and summer ranges, but we've not seen non-food fall this quickly since September 2009.

"Weak demand for clothing necessitated big price cuts. Clothing prices were down 7.7 per cent on the year before, their biggest drop in the six years of this survey. But clothing suffered its worst sales fall since last Easter.

"Food inflation was marginally down on the previous month, a reflection of easing commodity costs filtering through and better fresh food prices. There is some volatility in the system but, barring any major shocks in the supply chain, I still expect stable food inflation as the year goes on.

"Overall shop price inflation is at its lowest since November 2009, helping counter much bigger increases in other household costs which are undermining customers' spending power. With consumer confidence creeping up, retailers will be hoping for an increased willingness to buy more than just immediate needs."

Mike Watkins, Head of Retailer and Business Insight, Nielsen said: "With the traditional high street January sales being replaced by year-round discounting, it`s no surprise to see a continuation of deflation in non-food, particularly in clothing and footwear where half-price reductions have been used to attract shoppers post-Christmas. For food retailers, despite seasonal promotions coming to an end, food inflation has remained steady at around four per cent. This is perhaps a positive sign that the industry is managing the impact of any cost inflation coming through the supply chain."

Source : British Retail Consortium
www.brc.org.uk/brc_news_detail.asp?id=2383