Prices in British shops experienced deflation of 1% in the month of February, according to a statement from the British Retail Consortium.
This was a 'sharp deceleration' from the January fall of 1.7%, and continues a trend of year-on-year price slumps that has been happening for nearly four years.
Helen Dickinson, the group's executive, said, "It is clear that the significant underlying cost pressures, which have been building over the last year are beginning to filter through into shop prices.
"Global food prices were on average 16 per cent higher at the beginning of this year compared to last, whilst over the same period the value of the pound fell around 15 per cent."
Food prices saw more inflation (+0.4%) - the first increase since April of last year - while non-food costs dropped 1.8% during the month, compared to the same period last year.
The price tag for fresh foods increased slightly, while the ambient food category rose 0.7% in February, after a 0.2% decline in the first month of the year.
Economic Impacts Manifesting
Dickinson said the deflation slow-down can be partly attributed to the end of post-Christmas sales in January, influenced by a lower holiday sales performance for some non-food categories.
“Looking further ahead, retailers, who operate in a highly competitive market with narrow margins, will be increasingly hard pushed to protect their customers from the inevitable impact of these rising cost pressures.
"We can therefore expect this impact to start manifesting in shop prices over the course of the year," Dickinson added.
In the same statement, head of the retailer and business insight division at Nielsen, Mike Watkins, had some hopeful words for retailers, "At the moment consumer sentiment around spending intentions is strong so we don’t anticipate any significant change on retail spend over the next few months even if shop price inflation gains more momentum.”
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Karen Henderson. To subscribe to ESM: The European Supermarket Magazine, click here.
