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Shop prices fall in February as cost pressures mount

Retailers are still cushioning their customers from the impact of price hikes, according to a new report by the British Retail Consortium (BRC).

Overall, clothing and footwear-specific shop prices reported deflation of 5.8% in February, compared to the same month in 2016. This figure marks a 0.3% deceleration compared to January 2017, which was 6.3% on January 2016.

In total, non-food shop prices decreased by 1.8% in February 2017, compared to the same period in the previous year. When taking into account food categories, this figure shrinks to 1% - continuing a trend of year-on-year price falls that has lasted for nearly four years.

BRC chief executive Helen Dickinson said: “It is clear that the significant underlying cost pressures, which have been building over the last year are beginning to filter through into shop prices. Global food prices were on average 16% higher at the beginning of this year compared to last, whilst over the same period the value of the pound fell around 15%. Despite this, February saw an increase of just 0.4 per cent in the prices of food sold in shops; proving retailers’ resilience in managing to largely shield consumers from cost increases.

“For the time being, consumers continue to benefit from an annual fall in non-food prices, which were down 1.8 per cent on the previous year. However, the rate of deflation has eased considerably from a monthly perspective, which can be explained in part by an end to the promotional activity in January, after a weak festive sales performance in some non- food categories.

“Looking further ahead, retailers, who operate in a highly competitive market with narrow margins, will be increasingly hard pushed to protect their customers from the inevitable impact of these rising cost pressures. We can therefore expect this impact to start manifesting in shop prices over the course of the year.”

Mike Watkins, head of retailer and business insight at Nielsen, added: “At the moment consumer sentiment around spending intentions is strong so we don’t anticipate any significant change on retail spend over the next few months even if shop price inflation gains more momentum.”


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