UK retail sector nears end of four-year deflationary trend

Overall prices in British shops fell in June at the slowest annual pace since November 2013, the British Retail Consortium (BRC) revealed today.

Shop price deflation declined 0.3%, a slight deceleration from the 0.4 per cent fall in May, and the deflation of non-food products was 1.4%, comparable to May’s deflation of 1.5% and April’s of 1.4%.

This indicates that the four-year trend of falling shop prices could be coming to an end, as feed-through from the depreciation of the pound and rising commodity prices continues.

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BRC chief executive Helen Dickinson said: “The year on year numbers belie the fact that prices have been heading upwards for the last six months; it’s just that significant deflation in the second half of 2016 means there has been considerable ground to make up in the year on year figures.

“The reality is that cost pressures faced by retailers continue to mount. These pressures arise both from market driven increases in the underlying cost of goods and as a result of Government policies,” she continued.

“There is a limit to the ability of retailers to protect consumers by absorbing these impacts into their margins, as a result further price increases are inevitable. With that in mind and with the UK’s trading relationships under discussion, it’s of the utmost importance that the Government does all it can to limit any further cost increases that could further adversely impact the finances of the UK’s consumers.”

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