Shop prices still falling as retail enters second year of deflation

PRICES have now been falling for over a year in Britain’s shops, according to figures released by the British Retail Consortium (BRC) and Nielsen today, with the continued recovery still putting little pressure on price tags.

The BRC/Nielsen index registered a 1.4 per cent decline in prices overall. Food prices rose by 0.7 per cent, but the increase is the joint-lowest on record. Non-food items alone dropped 2.8 per cent.

Clothing and footwear prices are bearing down most of all on the price index, sliding by 11.4 per cent in the past year. Electrical items also fell by more than average, with a 3.2 per cent decrease.

“Little in the way of immediate seasonal or weather related price increases is anticipated so the outlook for the next three months is for relatively stable shop price inflation. Helped by the increases in consumer confidence since the start of the year, this should encourage shoppers to spend more freely over the summer months,” said Mike Watkins of Nielsen.

Overall inflation in the UK fell below the Bank of England’s two per cent target in January and has stayed below that level in the months since.