Shop prices kept in check

Julian Harris
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INTENSE competition between retailers in the run up to Christmas is driving down shop price inflation, new figures reveal today.

Shop prices are rising at a much slower rate than overall inflation, the Shop Price Index (SPI) showed.

For the first time in five months year on year shop price inflation actually fell, down to two per cent in November from 2.2 per cent in October – considerably below overall Consumer Price Index (CPI) inflation, which hit 3.2 per cent in October.

But in shops, even food price inflation fell, down from 4.4 per cent in October to four per cent last month. This is despite commodity prices driving up food costs globally.

In China food inflation hit 10.1 per cent in October, provoking concern over the welfare of the country’s poor.

“A fall in [UK] food inflation shows the highly competitive grocery market is keeping costs down,” said Stephen Robertson of the British Retail Consortium (BRC), which compiled the data with market researchers Nielsen.

And non-food inflation fell below one per cent, to 0.9 per cent.

As retailers scramble for business, special offers are being offered well in advance of the traditional time for sales after Christmas, Robertson said.

According to the data, 38 per cent of fast moving consumer goods are being sold on special offer, an all-time high.

On 4 January the government will increase VAT to 20 per cent, potentially dampening sales.

“We expect retailers to keep promoting and discounting,” said Mike Watkins of Nielsen.