Shop prices up slightly on a year ago despite discounting

Shop prices in January were slightly up on a year ago – despite heavy post-Christmas discounting – to mark the fourth consecutive month of increases, figures show.

Shop price inflation accelerated from 0.3% in December to 0.4% – the highest rate since April 2013, according to the BRC-Nielsen Shop Price Index.

Food inflation remained steady at 1.5% in January as a slowdown in dairy and meat products prices balanced increases in alcohol and fish.

Deflation of non-food prices continued to slow, with prices falling by 0.3% in January on the back of a 0.4% drop the month before.

The British Retail Consortium said it expected non-food prices to edge towards inflationary territory for the next couple of months.

BRC chief executive Helen Dickinson said: “Promotions have become the norm in recent years, but it was never going to be possible to continue making seasonal price cuts deeper each year; especially given that the cost of importing many of the goods we buy increased with the post-referendum fall in the pound.

“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 EU without a deal on the 29th March, leading to increases in the price of many goods in the weekly shopping basket.”

Mike Watkins, head of retailer and business insight at Nielsen, said: “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.

“Intense price competition between food retailers at the start of the year is protecting customers from rising prices and there is no inflationary pressure coming from the high street as retailers, faced with weak demand, continue to absorb the impact of any rising costs themselves.”