Shop Price inflation accelerated in February to +0.7%, up from +0.4% in January – the highest inflation rate since March 2013 – reports the latest BRC-Nielsen Shop price Index.
Non-food prices drove this movement, rising by +0.2% YoY, compared to the January decrease of -0.2%. This is the first time that the non-food category has been inflationary since March 2013,
According to the report, February is usually a month in which non-food retailers introduce new products at full price, after a January of clearing stock and deep discounting, so it is not surprising that non-food prices are higher month on month – but they are higher YoY for the first time in six years, reflecting the ongoing slow release of significant cost pressures which have built up in the supply chain over the last two years – notably from the currency depreciation in 2016 and the rise in oil prices last year.
However, Non-Food prices remain below levels seen in 2016. And, given weak discretionary spending and intense competition, it is likely that heavy discounting will be back, states BRC-Nielsen.
“For the first time in almost six years the price of non-food goods rose, albeit slowly, as cost pressures which had been building in the supply chain over the past few years fed through into prices," says BRC chief executive, Helen Dickinson OBE. "This adds to gradual ongoing rises in food prices, resulting in the highest overall shop price inflation since March 2013.
“While price rises over the last six months have been relatively modest, a no-deal Brexit would have a much more immediate and dramatic effect. If this happens, prices of both food and non-food would rise as a result of any new tariffs, the cost impact of any delays at borders, increased administration, and the likely currency depreciation. Parliament must protect British consumers by agreeing a solution that avoids a chaotic no-deal Brexit.”