Retail price rises are here to stay, according to BRC-Nielsen, which has published the latest findings from its Shop Price Index, covering May 2019.
Shop price inflation accelerated in May to +0.8% from +0.4% in April. This is above the 12- and six-month average price increases of +0.2% and +0.6%, respectively.
Non-food prices increased by +0.2% compared to April when prices decreased by -0.6%.
May was the second month of non-food inflation in 2019, in contrast to the past six years of deflation.
The driver behind this acceleration in shop price inflation was growth in non-food prices, caused by some sectors, such as furniture and health and beauty, adjusting their prices to their 2015/16 levels, following years of deep discounts.
For example, in May 2019 furniture prices were higher by +6.5% on May 2018, but only higher by +0.5% on May 2015. However, weak consumer spend on discretionary items is likely to continue to keep a lid on any significant price increases.
Mike Watkins, head of retailer and business insight, Nielsen, says: "Whilst there are still cost price increases coming through the supply chain, food inflation remains lower than CPI and supermarkets continue to offer price reductions, in particular on seasonal food and drink, which is helping to offset other cost of living increases. Inflation has returned to non food but consumers remain cautious and there is intense competition on the high street. With non-food retailers facing uncertain levels of demand, price discounting could quickly return if demand weakens over the next few months."