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Shop price inflation hits 16-month low in December, BRC finds

Shop price inflation reached its lowest level for 16 months in December, as retailers heavily discounted on goods including clothing and footwear in the run up to Christmas, the British Retail Consortium (BRC)- Nielsen Shop Price Index found.

Non-food inflation fell to a two-year low to 0.3%.

Clothing and Footwear

Deflation in the clothing and footwear category increased to 3.9% in December from 3.2% in November, with women’s and children’s clothing, footwear and the clothing accessories categories all showing annual deflation rates above 2%. Babywear was the only inflationary category in December. 

On a month-on-month basis, clothing and footwear prices fell 1.2% in December after being broadly flat in November.

Cotton Prices

There has been a significant fall in the price of cotton, which is currently 33% down on a year ago. Without any shocks to supply, cotton prices are expected to remain stable over the year, which in turn will help keep clothing and footwear prices low. Discounts and promotions will continue to be used to drive sales and this looks likely to carry on as consumers disposable incomes remain squeezed.

“The Government’s official measure of inflation’s running at nearly 5% as businesses and householders battle with soaring utility and fuel bills,” BRC director general Stephen Robertson commented.

“In this climate, retailers deserve credit for keeping costs down. Stiff competition throughout the sector resulted in a blizzard of promotions and discounts ahead of Christmas, which will have been a particular help to families facing falls in their disposable incomes.”

 

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