Shop Prices having falling by the highest rate since records began in 2006, dropping 2.4% in May compared to a 1.7% decrease in April. This is below the 12- and 6-month average price decreases of 0.7% and 1.0%, respectively, says the British Retail Consortium (BRC).
Non-Food prices fell sharply by 4.6% in May compared to a decline of 3.7% in April. This is below the 12-and 6-month average price declines of 1.9% and 2.4%, respectively. This too is the highest rate of decline since December 2006. Food inflation, however, eased to 1.5% in May, down from 1.8% in April. This is in line with the 12- and 6-month average price increases of 1.5% and 1.5%, respectively.
Fresh Food inflation slowed to 0.5% in May, down from 1.0% in April, while ambient Food inflation decelerated slightly to 2.9% in May down from 3.0 in April.
Helen Dickinson OBE, Chief Executive, British Retail Consortium, comments: “Shop prices in May fell at their fastest rate since 2006, which was largely driven by the drop in non-food prices. Clothing and Furniture saw the biggest drop as retailers ran promotions to encourage consumer spending and attempted to mitigate recent losses. Year-on-year food prices increased slightly due to higher business costs, implementing social distancing measures and the upward pressure from labour shortages, but were down on the previous month as more home-grown produce became available. We expect to see continued upward pressure on food prices from the effects of the pandemic in the coming months, while non-food prices are likely to remain deflationary with subdued sales.”
She adds: “Even as non-essential shops begin to reopen from 15 June, consumer demand is expected to remain weak and many retailers will have to fight to survive, especially with the added costs of social distancing measures. Retailers face an uphill battle to continue to provide their customers with high quality and great value products despite mounting costs. Government support remains essential, both to rebuild consumer confidence and to support the thousands of firms and millions of jobs that rely on it.”
Mike Watkins, Head of Retailer and Business Insight, Nielsen, says : “With the retail industry coping with store closures and social distancing limitations, it’s no surprise to see shop price inflation slowing in recent weeks. Across the major supermarkets with sales growths in high single digits in May, the consumer spend on promotions has also been at an all-time low, but there has been little upwards pressure on prices. However, as we move towards summer with the importance of seasonal foods and with the supply chain still disrupted, we can anticipate some volatility in prices.”