May 3, 2017
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BRC index shows rising inflationary pressures but fashion prices still fall

May 3, 2017

UK prices in stores may have fallen by the smallest amount year-on-year in April - driven upwards by food prices - but prices in the fashion sector still fell the most as retailers tried to pass on higher costs to customers but shoppers were having none of it.

Stores are still having to discount to attract shoppers into stores

Let’s look at the numbers. First the headline figure - shop prices fell 0.5%. That’s less than the 0.8% drop in March and the lowest fall since November 2013, according to the British Retail Consortium--Nielsen Shop Price Index. Higher costs due to the lower pound were to blame, they said. But month-on-month, prices rose 0.1%, highlighting the inflationary pressures even further.

On an annual basis, non-food prices fell 1.4%, after a 2% drop during March, showing that retailers are clearly passing on the higher prices of their outsourced fashion goods but still having to discount to some degree.

Nielsen’s Mike Watkins said that retailers are still holding back from passing their higher costs onto consumers fully and in non-foods, the late Easter meant prices still fell as stores launched seasonal promotions and cleared inventory in readiness for their high-summer drops.

The BRC expects inflation to continuing rising (or deflation to continue slowing) for the rest of the year.

“This month’s figures mark the four-year anniversary of falling shop prices as competition in the industry continues to keep a lid on prices for consumers,” said BRC chief executive Helen Dickinson. “Nevertheless, the rate of deflation has been decelerating month on month as retailers battle with inflationary pressures resulting from the impact of the weaker pound on input prices.”

Dickinson also called for a “consumers first” approach to the Brexit talks once an emboldened Conservative party or one or more opposition parties are in the negotiating seat after the election on June 8.

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