April marks three years of shop prices falling

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April 2016 marks three years of falling shop prices, with prices declining by 1.7% in April compared to a year earlier.

According to the British Retail Consortium (BRC) and Nielsen’s Shop Price Index non-food deflation accelerated to 2.9% in April from the 2.6% fall in March. This is deeper than the 12-month average of -2.7%.

Elsewhere, food returned to inflationary territory in April, up 0.1% compared with the 0.4% decline in the previous two months.

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“The thirty-six consecutive months of price falls is being driven by intense competition across the industry,” comments British Retail Consortium chief executive, Helen Dickinson.” It has knock on implications for margins and profitability given the combination of continued investment in digital and rising cost pressures, compounded by recent policy announcements.

Dickinson continues: “Ensuring they do not pass on these cost increases, alongside the intensity of competition in the market, are the principal reasons why retailers continue to respond to their customers’ demands for value. As this month’s figures show, this has helped shoppers and kept inflation (and therefore interest rates) low to betterment of the UK economy.”

Non-food prices marked the thirty-seventh month of deflation. The Index reports that “excellent bargains” were to be found in clothing and footwear, electricals and furniture and floorcovering.

Clothing and footwear saw a significant fall of 7.1%, highlighting the heavy discounting in the run up to the summer season.

Dickinson adds: “Hopefully today’s anniversary of falling prices will be a strong remedy to consumer confidence which has weakened significantly since the beginning of the year.”

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