Retail prices down as discounting digs in
Overall prices in UK stores in January fell 0.57 per cent compared with January 2005, according to the BRC Shop Price Index (SPI) inflation rate. The overall index stands at 100.39 compared with 100.97 in January last year.

For the first time since August 2000, food prices were lower than a year ago, by 0.52 per cent. This was despite an increase of 0.22 per cent from December last year. The food index stands at 113.68 compared with 114.27 in January last year.

The price of non-food items showed a year-on-year decline for the eighth consecutive month. Non-food prices are now 0.58 per cent lower than in January last year. The non-food index now stands at 92.96 compared with 93.49 in January last year.

Overall, shop prices in January fell by 0.27 per cent from December. Non-food prices dropped back 0.50 per cent and food prices increased by 0.22 per cent.

BRC director-general Kevin Hawkins said: 'These results clearly show that retail price deflation is strengthening, particularly because discounting has, in general, been less widespread and prolonged this January than in previous years. Yet there is no abatement in the inflation of retailers' fixed costs - wages, property rents and rates, fuel and energy - and the squeeze on margins is tightening.'

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