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BRC reports UK shop prices at lowest level of deflation since 2006

Retail prices in the UK fell for the eighth consecutive month in December and the annual deflation rate of 0.8% is the deepest recorded since December 2006, according to the British Retail Consortium (BRC) Shop Price Index released on Tuesday.

Data collated for the index also showed that food inflation slowed from 2.3% to 1.7%, its lowest level since 2010. Non-food deflation accelerated to 2.3% and has been deeper than 2% for six consecutive months.

The BRC-Nielsen Shop Price Index (SPI), administered by information and measurement company Nielsen, is designed to provide an accurate picture of the inflation rate of 500 of the most commonly bought high street products in stores. Data collated and analysed on behalf of the BRC covers seven main sectors of purchase: food, DIY, gardening and hardware, furniture, books, stationery and home entertainment, electrical, clothing and footwear, and other non-food.

Prices decreased for books, entertainment and home improvement products during December, as retailers offered discounts to people shopping for Christmas. In addition, ‘Cyber Monday’ was included in the period covered by the index, which mean that further discounting took place.

Deflation in clothing and footwear and electricals remained deeper than the overall non-food rate, while furniture and floorcoverings reported annual deflation for the ninth consecutive month.

The SPI category for electricals showed that deflation in that sector accelerated to 3.5% in December, from 3.0% in November, while inflation in the DIY, gardening and hardware category slowed to 0.3% in December, from 1.6% in November. The figures for the house and garden and glass, tableware and hardware categories showed that inflation rates for tools and equipment were decelerated, reportedly as a result of the growth in the housing market.

In the books, stationery and home entertainment category, annual deflation was recorded for the second time in three months, falling 1.4% from a 0.4% rise in November. The fall was said to be driven by deflation in the books and newspapers category, which outweighed rising inflation in the stationery and home entertainment categories.

Annual inflation of 1.2%, from 1.7%, was reported for the health and beauty category in November. Data for the personal care category showed a slowing in its inflation rate, however this was outweighed by acceleration in the toiletries and cosmetics inflation rate.


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