Overall shop prices in May rise 0.42% from April

07 Jun '06

2 min read

The BRC Shop Price Index (SPI) for May showed overall prices were 0.48 percent lower than in May 2005, a smaller decrease than the 1.28 percent reported in April. Prices in May showed the first month-on-month increase so far this year, with both food and non-food showing an increase.

Overall shop prices in May rose by 0.42 percent from April. The price of non-food items increased for the first time so far this year. After two consecutive months of falling prices, food showed an increase in price, the third month this year food has shown a month-on-month increase.

Kevin Hawkins, Director General, BRC comments:
"For the eighth consecutive month prices have remained lower than a year ago: with a trend like this, no-one can deny that retail price deflation is here. It is understandable that May saw a slight increase in prices compared to April, after the Easter sales ended. But the underlying trend is clear, and has been for the past year. Prices are falling at a time when fixed costs are rising. Price deflation, and the fierce competition which generates it, clearly benefits consumers, but at the cost of substantial pressure on retail margins. A rise in interest rates anytime soon will have a detrimental effect on the sector and will further erode the already fragile confidence of many consumers."

Mike Watkins, Senior Manager, Retailer Services, ACNielsen comments:
"Aside from seasonal price changes the underlying trend is a continuation of price reductions in many food categories and price deflation in key non-foods. Whilst food categories such as Liquor and Impulse will get a short-term boost during the World Cup, retailers in general will need to keep prices competitive over the next few weeks to maintain sales. For high street retailers this could require the summer discounts starting sooner rather than later."

British Retail Consortium

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