Non-food prices continued to fall in January amid intense competition on the high street, although food inflation picked up.
The latest BRC-Nielsen Shop Price Index shows overall prices fell by 0.3% this month, compared to a 0.4% drop in December.
Non-Food prices slipped 1.5%, the same rate of decrease as in the previous month.
Food inflation accelerated to 1.6% in January from 0.8% in December. In fresh food, inflation eased to 0.7%, from 0.8% previously. However, ambient food inflation increased to 2.8% in January. This was up on the 2.4% recorded in December and is the highest rate since April last year.
Helen Dickinson Chief Executive of the British Retail Consortium, commented: “Grocery prices could rise further as last year’s increase in global food prices filters through to British shelves; nonetheless, food prices remain low by European standards.”
She added: “Rising costs from business rates, minimum wage increases, and the Apprenticeship Levy continue to put upward pressure on prices. When combined with fierce competition across the industry, margins are being steadily squeezed as retailers strive to keep prices low for consumers. The Government should make good on their promise to reform the broken business rates system, doing their part to secure the vibrant high streets British consumers deserve.”
Mike Watkins, Head of Retailer and Business Insight at Nielsen, added: “There is no inflationary pressure coming from the high street as shoppers remain nervous about spending and discounting continues for many non-food retailers.
“Whilst promotions in Supermarkets have returned to more normal levels post-Christmas, the sector remains embattled with fierce price competition which looks set to continue. And after a decline in volumes across food retailing last year, the industry will be looking to stabilise sales in the first quarter.”
