UK shop prices fell in every month of 2014 as deflation continues

Prices in UK shops fell in every month of 2014, according to an industry group that predicts tumbling oil prices will continue the deflationary pattern this year.

The British Retail Consortium’s latest figures show shop prices fell again in December on a year earlier, the 20th consecutive month of deflation.

Prices were not down quite as sharply as in November, however, as food prices ceased falling in December.

Helen Dickinson, BRC director general, said: “A number of key commodities in the retail supply chain, in particular oil, have fallen dramatically recently and the impact of these falls will continue to make its way through to shop prices for some time to come.”

Overall shop prices, covering food and non-food, fell an annual 1.7% in December after a 1.9% drop in November, according to the BRC-Nielsen shop price index. Food was up 0.1% on the year after deflation of 0.2% in November. Non-food deflation eased to 2.8% in December from 2.9% in November.

The BRC insisted news of more price falls was not necessarily evidence of pressure on retailers. “Retail business have seen significant decreases in their own input costs,” said Dickinson.

The figures will reinforce expectations that overall UK inflation remained low in December, perhaps even falling below the 1% level hit in November, a 12-year low.

Bank of England governor Mark Carney will have to write an explanatory letter to George Osborne if inflation falls below 1%, or more than one percentage point adrift of a 2% target. The December inflation figures are due next Tuesday.

Powered by article was written by Katie Allen, for The Guardian on Wednesday 7th January 2015 00.04 Europe/London © Guardian News and Media Limited 2010


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