Non-food inflation slowed to 0.8% in May from 1.2% in April reflecting weak consumer demand and retailer promotions and discounting,
According the latest figures from the British Retail Consortium-Nielsen Shop Price Index, which do not break out clothing sales, said that despite rising raw material and energy costs and the VAT increase, prices for non-food goods are less than 1% higher than last year.
Meanwhile, the rising cost of key commodities, due to extreme weather conditions and global demand, has led to a slight rise in food prices from 4.7% in April to 4.9% in May.
Stephen Robertson, director general of the BRC, said: “Wheat is up 72% and oil 50% on a year ago while rising gas and electricity prices are pushing up costs at every stage of the supply chain.”
Overall shop price fell to 2.3%, almost half the Consumer Price Index, in May from 2.5% in April. “[It] shows that rising utility and insurance costs are hitting households much harder than shop prices,” said Robertson.
Mike Watkins, senior manager, retailer services, Nielsen added: “Inflation and other rising household bills are still top of mind for shoppers so retailers are offering more promotions and deeper price cuts. This continues to be an important driver of sales for retailers and a coping strategy for shoppers but should not be seen as the long term answer to any weakening of consumer demand or falls in consumer confidence.”