Shop prices fall by 1.9%
Figures released by the British Retail Consortium and Nielsen in their monthly shop price index show food prices reported annual deflation of 0.9% for the third consecutive month. This meant that food prices have fallen for a fifth month in a row.
Meanwhile, non-food deflation remained at 2.5% in May.
BRC director general Helen Dickinson said: “Food prices remained at their record low for a third consecutive month, with low priced fresh food helping to keep prices down. We’ve now had five consecutive months of food prices falling. While ambient food saw a small rise fresh food hit a new record low.”
Deflation in the fresh food category accelerated to 1.9% in May from 1.4% in April, a new record low. Downward pressure was exerted by the meat, milk, cheese and eggs, and oils and fats sub categories, all of which reported annual deflation, along with vegetables. Convenience food and fish remained inflationary.
Deep deflation was recorded in clothing and footwear, electricals and books, stationery and home entertainment, all of which reported deflation below 5%. Deflation in furniture and floorcoverings accelerated sharply, to its lowest rate since December 2014. Meanwhile, health and beauty and other non-food remained in inflationary territory, both reporting a slight uplift in their rates in May.
Mike Watkins, head of retailer and business insight at Nielsen, said: “Retailers continue to use price cuts and promotions to stimulate sales which is helping to maintain shop price deflation, and we see little evidence to suggest that prices will rise in the near future. With many food retailers still using price cuts to attract new shoppers, this is lowering the cost of the weekly shop and so the overall CPI figure in the UK. Deflation and price led competition will continue to be a key driver of sales growth for some time yet.”
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