Shop price deflation deepens in February

Shop price deflation deepened in February, indicating that the retail sector has passed the peak of the upward pressure on inflation caused by the fall in the pound.

According to the British Retail Consortium, shop prices fell 0.8% this month, from 0.5% in January.

Non-food prices decreased at a rate of 2.2% compared to January when prices declined by 1.9%. This was the deepest deflation since April 2017.

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BRC chief executive Helen Dickinson said the rate of deflation will ease the squeeze on consumer incomes over the coming year, but it’s likely to do little to lift the rate of growth in consumption.

“Earnings are still falling in real terms, despite wages increasing, and savings are unlikely to provide the same support to spending that they have over the last 18 months,” she explained.

“While it’s good news that earnings and inflation are heading in the right directions for consumers, retailers can expect to see more of the same, tough trading environment over the coming months.

“With that in mind, it’s imperative we get clarity and a definitive agreement over the next month’s Brexit negotiations around the exact form of the transition arrangements. Both the transition and the UK’s future relationship with the EU will determine how we maintain consumers’ current access to a diverse choice of affordable goods.”

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