Overall shop prices fell for a sixth consecutive month in November as struggling retailers discounted products to kick-start festive spending and fresh food inflation weakened.
Data from the BRC-Nielsen Shop Price Index shows overall prices were down 0.5% year-on-year, having fallen 0.4% in October.
With ongoing political and Brexit uncertainty causing consumer caution, non-food prices fell by 1.6% last month, compared to October’s year-on-year decrease of 1.5%, as retailers pushed for even deeper cuts to encourage consumers to open their wallets.
Food prices rose 1.4% but this was a slowdown from the 1.6% increase seen in October. The fall was driven by weaker fresh food inflation, which slipped from 0.8% to 0.6% due to a strong crop yield for fresh fruits in the UK and a fall in the global price of dairy. Ambient food inflation edged down from 2.7% to 2.6%.
Helen Dickinson, Chief Executive of the British Retail Consortium, commented: “While consumers will welcome the fall in prices in the run up to Christmas, there are various factors which could push food prices up in the longer term. These include the impact of flooding on the yields of many root vegetables and the rising global prices of meat.”
She also highlighted that the biggest threat to future prices remained the risk of a No-Deal Brexit pushing up the costs of EU imports, which account for 30% of the food consumed in the UK. “The next Government should aim to provide clarity on the UK’s future relationship with the EU as soon as possible,” said Dickinson.
Meanwhile, amid mounting concerns that retailers will face a difficult Christmas trading period, Mike Watkins, head of retailer and business insight at Nielsen, commented: “With fragile consumer confidence, retailers are keeping price increases to a minimum to encourage consumers to spend and there is little inflationary pressure coming from the high street.
“With Black Friday discounts and promotions already giving shoppers further savings, any new pricing initiatives to drive demand in the final weeks up to Christmas will need to be balanced to protect margins.”
