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Fastest fall in non-food prices for two years
In December the BRC Nielsen Shop Price Index (SPI) reported annual inflation slowing to 0.5% from 2.7% in November.
The sharp deceleration reflects unprecedented levels of discounting on the High Street as well as the reduction in VAT.Food inflation fell to 6.2% in December from 7.1% in November, while the non-food category s
On a month-on-month basis the price level has been largely affected by heavy discounting in the run up to Christmas and the cut in VAT. The overall monthly index measured deflation of 2.0% in December compared with inflation of 0.2% in November. The food category showed deflation of 0.7%, while non-food reported deflation of 2.7%.
Stephen Robertson, BRC Director General said:
“Huge discounting by retailers, together with the VAT reduction, brought non-food prices down dramatically. Goods in every category were much cheaper - both compared with the previous month and a year ago. Electricals, books and home entertainment prices were all around five per cent lower than last year.
“Food inflation fell again - to its lowest level since last May, due to lower oil and commodity prices.
“It's clear retailers are holding down shop prices at a time when many of their own costs are increasing. The Government shouldn't be adding cost burdens, such as record high business rate increases, at a time when margins are being severely squeezed.”
Mike Watkins, Senior Manager, Retailer Services, Nielsen added: “The VAT reduction has been passed onto shoppers and this contributed to a further fall in shop prices in December. But the acceleration of discounting by retailers in the run-up to Christmas, particularly in non-foods, also reduced prices and food inflation continues to slow from its peak in August.”
Tagged as: brc | food price inflation
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