According to the BRC-Nielsen Shop Price Index, food inflation remained steady in January, while non-food goods saw a lower rate of deflation – which reflects in part less heavy discounting this January compared to January 2018 for some goods, such as furniture and clothing, and some price increases for others.
Shop price inflation accelerated in January to +0.4%, up from +0.3% in December. This was the fourth consecutive month of price increases, and the highest inflation rate since April 2013.
Non-food deflation continued to decelerate, with prices falling by -0.3% in January, compared to the -0.4% decline in December. This is the lowest rate of deflation since March 2013.
Helen Dickinson OBE, BRC chief executive, says: “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 retailer and business insight, Nielsen, adds: “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. The retail outlook is for low growth over the next couple of months and for shop price inflation to remain at around current levels, and less than CPI.”
The groups behind the index expect non-food prices to edge towards inflationary territory for the next couple of months.