Price inflation nudges higher in January - data
Prices inched ahead in January as under-pressure retailers sought to come back from tough festive trading.
Prices rose 0.4% year-on-year in January, supported by rises in food, according to the monthly Shop Price Index from the British Retail Consortium and Nielsen. Fresh food was ahead 1.2% while ambient food rose 1.9%.
Non-food prices nudged lower, down 0.3% on January 2018.
Helen Dickinson, chief executive of the BRC, said: “Despite significant post-Christmas discounting, shop prices in January were slightly up on last year. Promotions have been the norm in recent years, but it was never going to be possible to continue making seasonal price cuts deeper each year.
“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 European Union without a deal, leading to increases in the price of many goods in the weekly shopping basket.”
Mike Watkins, head of retail and business insight at Nielsen, added: “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.”
In December there was a sharp slowdown in the amount of money spent on credit cards, as nervous consumers reined in spending. Earlier this month the BRC said that retailers had endured their worst Christmas in a decade, although some – notably discount grocers such as Aldi, and Tesco – reported stronger performances.
Clive Black, analyst at Shore Capital, said that the “tiresome political backdrop” had turned the UK into a “worried nation” despite full employment, improving wage growth and muted price inflation.
“In the near term, all things being equal, the BRC-Nielson expect food price inflation in the UK to ease in forthcoming months,” he added. “However, all things are not equal and the UK faces uncertainty over its trading relations with EU, from where around 30% of the country’s food stuffs are imported; around 40% of all foods consumed in the UK are brought in from outside these shores.
“We simply cannot predict what is what – our gut feeling is that in any hard exit the British will not go hungry, but there may be price volatility that is upwards, not least as sterling may further devalue, and maybe some product outages.”