The latest BRC-Nielsen Shop Price Index shows that overall inflation accelerated to 0.3% last month compared to a year ago, and up from 0.1% in November.
The index measures the price of goods across the UK’s most popular retail outlets and is considered a leading measure of inflationary pressure.
This is the fourth month of inflation in five years and the highest since April 2013 and was driven by a slow in deflation across general merchandise and an increase in cost across ambient food, with prices up 2.3% in December from 2.1% in November.
Non-food items also saw deflation drop to 0.4% in December from 0.8% the previous month, the lowest rate of decline since March 2013.
This comes as little surprise, despite heavy discounting by retailers, given the general increase in consumer spending over the Christmas period, both on presents for loved ones and food items for the festive feasting that follows.
In addition, a decline in sterling has pushed up the cost of imports and BRC boss, Helen Dickinson, highlighted that a no-deal Brexit could add to the tough times retailers are facing.
“Shoppers may have become accustomed to great value, but Brexit uncertainty means that a continuation of low prices is by no means guaranteed.”
But it isn’t just the cost of imports that are causing problems. 2018 saw a number of well-known high street names either struggle financially or disappear altogether as consumer behaviour continued to shift towards the online space.
With greater value and convenience on offer, more and more of us are choosing to shop online and this has become a hard trend to combat for the UK’s bricks and mortar outlets. This trend is certain to persist over 2019 and for those failing to adopt a robust digital strategy to complement their physical assets, there could be further problems on the horizon.
Business Growth Expert and Yomdel CEO, Andy Soloman commented on the latest figures..
“Despite the wider woes of the Great British high street, an uplift in shop prices was always on the cards over December despite retailers having to slash their prices to remain competitive.
However, while previous years have been tough enough, the nation’s bricks and mortar outlets now face a wider spectrum of issues for the year ahead. Not only does the changing face of retail mean they need to continue to pivot in order to remain relevant against the growing tide of online shopping, but the possibility of crashing out of the EU without a trade deal could see our imports become far more expensive.
This could be disastrous for the UK retail sector, one that is already struggling to keep its head above water, and we need to look beyond discounting, vouchering and limiting price rises to adopt more sustainable growth strategies for the year ahead.”
