Post-Christmas lull and lockdown weigh on shop prices

Shop prices eased in January, industry data showed on Wednesday, fuelled by the post-Christmas sales and national lockdown.

According to the latest BRC-Nielsen Shop Price Index, shop prices fell 2.2% in January year-on-year, or by 0.7% compared to December, when prices decreased 1.8%.

Januarys’ figure is the lowest since May 2020, and deeper than both the 12-month and six-month average, for falls of 1.5% and 1.7%, respectively.

Within the overall SPI, non-food prices fell 3.6% while food rose by 0.2% year-on-year. The increase in food prices was down on December’s rise of 0.4%, however, and the slowest pace of growth since January 2017.

Helen Dickinson, chief executive of the British Retail Consortium, said: “The January blues may have been slightly eased for many consumers, thanks to ongoing falling prices this month.

“Post-Christmas sales and the national lockdown drove non-food prices down, especially for clothing and DIY goods. Meanwhile, food prices rose at their slowest rate since January 2017 with supermarkets continuing to fiercely compete to offer hard-pressed customers the best combination of price and quality.”

However, she noted: “Brexit-related red tape, rising global shipping costs and food commodity prices, as the weight of forced closures and restrictions for many retail businesses means that pricing pressures are stacking up for retailers.”

Mike Watkins, head of retail and business insight at Nielsen, said: “January is always a difficult month for retailers after the increased spending over Christmas and New Year, and the impact of the return of lockdown has been further price deflation in non-food as retailers keep prices low to encourage shoppers to spend online.

“Looking ahead, we can see some turbulence in shop prices as the industry navigated through the impact of the EU trade deal, the increasing pressure on disposable incomes and the uncertainty of when non-essential retail can fully reopen.”