January shop price inflation lower than expected

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Many retailers fail to pass on VAT increase to shoppers

Shop price inflation rose just 2.3% in January, despite the VAT increase, as many retailers failed to pass the increase on to shoppers, according to the BRC-Neilsen Shop Price Index.

Non-food inflation accelerated to 1.9% in January, up from 1.4% in December.

British Retail Consortium director-general Stephenson Robertson said: “January’s VAT increase was lost among a huge number of discounts and promotions. We would have expected non-food inflation to be higher because of the VAT rate reversal, but many shops held off passing the extra costs onto their customers.

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"Fierce competition, in the face of weakening consumer demand and uncertainty about the recovery, is keeping shop prices down.”

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