Overall shop prices reported deflation of 1.9% in May unchanged from April. On a 12-month average basis, the Shop Price Index reported deflation of 1.8%. Non-food deflation remained at 2.5% in May.
BRC director general, Helen Dickinson, says: “Prices in Britain’s shops continue to fall, this month by -1.9%. May saw the 25th consecutive month of falling shop prices and falling non-food prices now in their third year.
“Wider macro-economic data continues to be supportive for the consumer. The main measure of UK inflation turned negative in April for the first time on record, with the rate falling to -0.1%. This is expected to be temporary and should result in increased consumer spending.
“Now that the General Election has taken place, government policy is likely to advance rapidly. A number of areas will obviously require consideration, not least, ensuring that the structural review of business rates remains ambitious and far-reaching. This is vitally important for retailers who are presently burdened with above inflation operating costs.”
Mike Watkins, head of Retailer and Business Insight at Nielsen, says: “Retailers continue to use price cuts and promotions to stimulate sales which is helping to maintain shop price deflation, and we see little evidence to suggest that prices will rise in the near future. With many food retailers still using price cuts to attract new shoppers, this is lowering the cost of the weekly shop and so the overall CPI figure in the UK. Deflation and price-led competition will continue to be a key driver of sales growth for some time yet.”
Non-Food deflation was unchanged at 2.5% in May for the second month in a row. Deflation in Furniture and Floorcoverings accelerated sharply, to its lowest rate since December 2014.
The Furniture and Floorcoverings category reported annual deflation of 1.9% in May from -0.1% in April. The majority of the downward pressure came from the Furniture, Furnishings and Carpets category which accelerated back into deflationary territory after reporting annual inflation in April. Mortgage approvals as measure by the Bank of England edged up in April to 68,706, reporting their largest monthly gain in six years. This is the fourth time in five months mortgage approvals have risen and supports the view that the housing market is beginning to pick up again.
