Shop price deflation continues in May showing no sign of an end

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Overall shop prices reported deflation of 1.8% in May, from the 1.7% decline in April.

According to the British Retail Consortium, this is in line with the 12-month average,

Non-food deflation slowed to -2.7% from 2.9% in April, which is also in line with the 12 month average.

This report shows that shop price inflation remains below consumer price inflation. Head of retailer and business insight at Nielsen, Mike Watkins, says as non-food prices continue to fall, retailers will have to keep prices the same or probably even lower over the next six months.

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Chief executive, British Retail Consortium chief executive Helen Dickinson, says: “The fact that today’s figures remain deflationary doesn’t come as a great surprise. We’ve experienced a record run of falling shop prices and, for the time being, there’s little to suggest that’ll end any time soon – so the good news for consumers continues. Indeed, with food prices remaining flat at the same time as wages continue to grow means customers will have yet more money in their pockets at the end of their weekly shop.

“Looking slightly longer term we know that the recent commodity price increases will start to put pressure on retailers to raise their own prices. We would normally expect these input costs to filter through to prices eventually, but the big question is how far fierce competition in the industry will insulate consumers from price increases.  If retailers do continue to absorb these costs it’ll be more important than ever that other external costs, business rates chief among them, are brought under control.”

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