The British Retail Consortium reports UK Shop Price Index (SPI) for November 2007.
Year-on-Year:
The BRC-Nielsen Shop Price Index (SPI) for November shows that prices were 1.1% higher than at the same time a year ago. This keeps shop price inflation at its highest rate so far this year, caused by the continued inflationary cost pressures in food filtering through to overall prices, which showed the largest year-on-year increase since December 2006, rising by 4.3%, up from 3.7% in October.
In November, non-food prices remained lower than a year ago, with the rate of deflation accelerating to -0.4% from -0.2% in October. The majority of deflation in non-food continues to come from clothing and footwear, electricals and health and beauty.
Month-on-Month:
Shop prices rose 0.5% between October and November, the same month-on-month change as in October. The main upward pressure came from food, which although easing from 1.4% in October to 0.7% in November, still outweighed the marginal rise of 0.3% seen in non-food.
Despite food inflation accelerating to a new high, deflation in non-food is continuing to keep overall shop price inflation down and well below the CPI, currently at 2.1%.
Although food price inflation is likely to remain high in the coming months, it is likely to be outweighed by a period of sustained and substantial discounting in non-food as retailers discount in the run up to Christmas and well into the first quarter of 2008 to combat the inevitable slowdown in consumer spending.
Kevin Hawkins, Director General, BRC comments: “Price competition in the retail market continues unabated. While commodity inflation is still driving up food prices, which the grocers are doing their best to not pass onto the consumer, overall shop price inflation is low and going a long way to ensure the Bank meets its 2% target. With a severe slow-down in consumer spending likely after Christmas, the next interest rate move should be a cut.” Mike Watkins, Senior Manager, Retailer Services, Nielsen comments: “Food retailers will be concerned about the inflationary pressures that are building and whether this impacts the motivation of the already cautious consumer, particularly after Christmas .In the run up to December 31st expect non food stores to keep promoting heavily and discounting to lower levels in order to drive footfall.”
British Retail Consortium
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