British retailers experience record store price deflation

Wednesday, 05 February 2014
UK retailers witnessed overall store prices deflate for the ninth consecutive month in January at the quickest pace reported over the past seven years according to the latest data published by the British Retail Consortium, which underlines the ongoing difficulties retailers face in spite of slow economic improvement.

The BRC-Nielsen Shop Price Index (SPI) reported a price decline increase to 1 percent from 0.8 percent in December, which is the largest drop seen in any month since the BRC began its monthly survey in 2006. Price deflation within the non-food sector, which includes items such as clothing, furniture and electronic devices, has declined more than 2 percent for seven consecutive months with the the rate of deflation hitting 2.7 percent in January.

 

Clothing prices drop 9.9 percent in December and January

Clothing prices continued to drop in January, declining by 5.3 percent on a month-on-month basis, according to the data. On a year-on-year basis, the average price of footwear and clothing has dropped by 9.9 percent during December and January. Overall, clothing prices declined across all surveyed categories, however women's wear and babywear reported the largest fall.

Helen Dickinson, director general at BRC commented: "Shop prices are falling at their fastest rate for 7 years, a new record for our data. January is always a key month for sales and promotions but discounts have been deeper and more widespread than last year and we are seeing this trend continuing. Our figures show that there have been particularly good deals to be had in clothing, furniture and electrical items this month as retailers prepare for their new collections.
 

The BRC highlights that while price deflation for clothing and footwear in January is a little below the three month average rate of 10 percent, it is still above the 12 month average price deflation of 7.7 percent. However, the BRC points out the the survey period occurs during a time of seasonal discount and sales, combined with the fact that many UK consumers usually take stock of this personal finances after the holiday season and refrain from overspending.
 

Mike Watkins, head of retailer and business insight at Nielsen, said: "The start of 2014 has seen a continuation of both slow retail growth and a continuation of slowing inflation. With the first few weeks of January a time when many households take stock of personal finances, the fall in shop price inflation will be a welcome boost for consumers."

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