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Prices continue to fall despite mounting costs, warns BRC

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January Shop Prices fell by 0.3% compared to a 0.4% decrease in December. This is below the 12-month average of 0.0% and above the six-month average price decrease of 0.5%, warns the British Retail Consortium (BRC), as part of the BRC-Nielsen Shop Price Index for January 2020

Non-Food prices fell by 1.5% in January, the same rate of decrease as in December. This is below the 12- month average price decline of 1.0% and in line with the 6-month average price decline of 1.5%. Food inflation accelerated to 1.6% in January, up from 1.4% in December. This is below the 12- month average price increase of 1.7%, but above the 6-month average price increase of 1.4

Fresh Food inflation eased to 0.7% in January from 0.8% in December. This is below the 12- and 6-month average price increases of 1.2% and 0.8%, respectively. Ambient Food inflation accelerated to 2.8% in January up from 2.4% in  December. This is above the 12- and 6-month average price increases of 2.4% and 2.3%, respectively, and the highest inflation rate since April 2019. 

Helen Dickinson OBE, Chief Executive, British Retail Consortium comments: “Shoppers will cheer as non-food prices fell in January, a continuation of the long-term trend in retail. This was tempered by growth in food prices which accelerated to 1.6%, slightly above the 6-month average. 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 adds: “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, Nielsen adds: “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.”

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