Overall shop prices reported deflation for the 21st consecutive month, decelerating to 1.3% in January, after reporting deflation of 1.7% in December, according to the latest BRC-Nielsen Shop Price Index.
In January, deflation in the Furniture and Floorcoverings category decelerated sharply to 0.6% from 2.8% in December, the lowest level since August 2014. This is below both the 12 and three month averages of 1.7% and 1.8% respectively.
House textiles and furniture, furnishings and carpets reported a deceleration in their deflation rates. Mortgage approvals rose to 60,275 from 58,956 In December, the first rise in six months.
Prices fell 1.4% on a month-on-month basis from a 0.5% fall in December.
BRC director general, Helen Dickinson, comments: “For 21 consecutive months prices in Britain’s shops have fallen, this month by -1.3%. It’s the second time in three months that we’ve seen food prices fall, accelerating to their lowest levels on record. Clearly customers were taking advantage of the January sales, with good bargains for furniture, flooring and electricals resulting in plenty of stock shifting.
“There is some evidence that the heavy discounting in early December resulted in some retailers pulling their new season stock forward, which meant a significant amount of goods were sold at full price in January. The halving of the oil price since the summer has helped the retail supply chains with the impact of these falls, continuing to make their way through to shop prices.
“With the outlook for inflation low, the jobs market robust and rising real incomes gathering pace, the outlook for consumer spending looks positive. Deflation doesn’t always translate into bad news for retailers. The Producers Price Index (which tracks the cost of raw materials to producers) remains deflationary, so retail businesses will continue to see decreases in their own input costs for the foreseeable future. To remain competitive, retailers will continue passing these savings on to the consumer.
“2015 is shaping up to be win-win year for shoppers and retailers alike.”
