Prices fall with post-Christmas sales

Shop Prices fell in January by 2.2%, below December’s decrease of 1.8%. This is the lowest deflation rate since May 2020. This is below the 12- and 6-month average price decreases of 1.5% and 1.7%, respectively.

According to the latest BRC-NIELSEN Shop Price Index – January 2021, Non-Food prices fell by 3.6%, compared to a decline of 3.2% in December. This is below the 12- and 6-month average price declines of 3.2% and 3.3%, respectively. Food inflation eased to 0.2% in January, down from to 0.4% in December.

Helen Dickinson OBE, Chief Executive, British Retail Consortium, said: “The January blues may have been slightly eased for many consumers thanks to ongoing falling prices this month. Post-Christmas sales and the national lockdown drove non-food prices down – especially for clothing and DIY goods. Meanwhile, food prices rose at their slowest rate since January 2017 with supermarkets continuing to fiercely compete to offer hard-pressed customers the best combination of price and quality.

“Brexit-related red tape, rising global shipping costs and food commodity prices, as well as the weight of forced closures and restrictions for many retail businesses, means that pricing pressures are stacking up for retailers. With consumers’ finances under increasing pressure and an intensely competitive environment firms will try to absorb the majority of costs. But with every business dealing with new processes and procedures Government must act quickly to ensure the Northern Ireland Protocol is implemented in a pragmatic and workable way and issues on movements of goods and ecommerce are ironed out quickly to prevent inflation flowing through to customers.”

Mike Watkins, Head of Retailer and Business Insight, Nielsen, said: “January is always a difficult month for retailers after the increased spending over the Christmas and New Year and the impact of the return of lockdown has been further price deflation in non food, as retailers keep prices low to encourage shoppers to spend online. Food retailers remain locked in a battle for market share and continue to cut prices and food price inflation is lower than this time last year.

“Looking ahead, we can expect some turbulence in shop prices as the industry navigates through the impact of the EU trade deal, the increasing pressure on disposable incomes, and the uncertainty of when non essential retail can fully reopen.”