A run of shop price deflation stretching back more than four years is about to come to an end, new figures have warned.
Prices inched down just 0.1% in November – the slowest rate of deflation for four years – according to the BRC-Nielsen Shop Price Index.
Non-food price deflation eased to 1.1% in November compared to the same period a year ago, representing the lowest rate of deflation since May 2013.
In contrast, food price inflation continued during the month, although it slowed to 1.5% year-on-year when compared to October’s 2.2% spike.
The 0.1% dip in overall shop prices in November was the 55th consecutive month of deflation, but BRC chief executive Helen Dickinson said the market was “teetering on the edge of a return to inflationary territory”.
Dickinson said: “While food inflation has fallen back in line with global prices, non-food deflation is as low as it’s been for more than three years, as hedging contracts come to an end and with them, retailers’ ability to shield their customers from the currency depreciation.
“The lower projections for consumer spending that came from the OBR’s downbeat forecast last week, and uplifts in labour costs, conjure up a perfect storm of economic pressures looming over an industry that’s already fiercely competitive.”
Nielsen’s head of retailer and business insight Mike Watkins added: “Many inflationary increases are still being absorbed by retailers and are not being passed on to the consumer in the form of higher prices.
“Nevertheless, the deflation in non-food continues to overshadow the discounting and promotional activity taking place in this channel as consumers become more cautious and look for ways to save on their household bills.”
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