Feb 1, 2017
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Heavy discounting in January drives UK shop prices lower

Feb 1, 2017

Clothing and footwear prices fell 6.3% in January as high street chains kicked off January sales with heavy promotions to clear excess stock.

This pushed prices of non-food items down by 2.3%, according to the BRC- Nielsen Shop Price Index for January. While furniture and flooring, electricals and DIY products experienced price decreases in the month, books and beauty products were 1.4% and 0.6% more expensive.

Overall shop prices fell 1.7%, but Helen Dickinson, chief executive of the British Retail Consortium, said this year will “inevitably" see an upward trend in inflation due to the falling pound and higher commodity prices.

"Consumer demand was perhaps better than expected at the end of last year and retailers are still managing to limit currency related cost increases being passed onto shoppers. This is helping to give some stability to the industry at the start of 2017. However, there is already inflationary pressure elsewhere in the economy and this will start to have an impact on the disposable income of households later in the year," commented Mike Watkins, head of retailer and business insight at Nielsen.

“Retailers’ focus will be on protecting their customers from the effects of increasing input costs, but with the cost of doing business rising and margins and profits being squeezed, their efforts will require the support of public policies that help them keep prices low for shoppers. This means capping the annual uplifts in business rates and ensuring no new tariffs remains a core objective of the negotiations on exiting the EU,” added Helen Dickinson.

Food deflation accelerated to 0.8% in January from the 0.7% decline in December. 

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