January shop price inflation highest since 2013

Shop price inflation increased to 0.4% in January, up from 0.3% in December 2018 – the fourth consecutive month of price increases and the highest inflation rate since April 2013.

According to the figures from the BRC-Nielsen shop price index, non-food deflation continued to decelerate, with prices falling by 0.3% in January, compared with the 0.4% decline in December. This is the lowest rate of deflation since March 2013.                                        

Additionally, food inflation remained steady in January at 1.5%. In line with global food prices developments, dairy products saw a slowdown in inflation and meat saw prices fall. However, inflation accelerated for other goods (alcoholic beverages and fish), keeping inflation steady.

The report found that the lower rate of deflation for non-food goods reflected, in part, less heavy discounting this January compared with January 2018 for some goods, such as furniture and clothing, or some price increases for others, such as DIY or health and beauty goods.

Helen Dickinson, CEO of the BRC, said: “Despite significant post-Christmas discounting, shop prices in January were slightly up on last year. Promotions have become the norm in recent years, but it was never going to be possible to continue making seasonal price cuts deeper each year; especially given that the cost of importing many of the goods we buy increased with the post-referendum fall in the pound.

“Consumers have little to fear in terms of inflation over the coming months with many of the underlying pressures on prices easing. That is unless the UK leaves the EU without a deal on the 29th March, leading to increases in the price of many goods in the weekly shopping basket.”

Mike Watkins, head of retail and business insight, at Nielsen, added: “With shoppers looking to make savings on household bills and sentiment on the turn, it’s good news that shop price inflation is broadly unchanged this month.

“Intense price competition between food retailers at the start of the year is protecting customers from rising prices and there is no inflationary pressure coming from the high street as retailers, faced with weak demand, continue to absorb the impact of any rising costs themselves.”