The retail sector has admitted the extent of January sale savings was not as deep this year for many popular goods, including clothing.
The latest British Retail Consortium (BRC)-Nielsen Shop Price Index showed a 0.4% rise in overall store prices during the year to January compared to a rise of 0.3% in the 12 months to December.
High levels of non-food discounting had been reported in the month after a tough Christmas and 2018 generally for the high street but the BRC said deflation – price falls – in the sector eased by 0.3% compared to 0.4% the previous month.
The study stated: “The lower rate of deflation for non-food goods reflects in part less heavy discounting this January compared to January 2018 for some goods, such as furniture and clothing, or some price increases for others, such as DIY or health & beauty goods.
“In these latter sectors of retail, prices have started rising mid-2018, a deferred referendum exchange rate adjustment.
“We expect non-food prices to edge towards inflationary territory for the next couple of months.”
The overall inflation figure showed the impact from food inflation, which continued to rise at a 1.5% pace.
The BRC reported alcohol and fish price increases offsetting falling dairy and meat costs.
The study was released as weaker consumer spending puts pressure on the economy in the run-up to Brexit.
That is despite official figures showing wage growth surging at levels not seen since the financial crisis at a time of record employment.
Household spending power is improved because consumer price inflation was last measured in December at a rate of 2.1%.
A string of retailers have blamed the fog of Brexit uncertainty for shoppers failing to part with their cash – the BRC declaring last Christmas the worst for a decade.
The body was behind a letter to MPs this week – signed by many top grocery chains – warning of empty shelves in the event of a no deal Brexit.
BRC chief executive, Helen Dickinson, said: “Promotions have become the norm in recent years, but it was never going to be possible to continue making seasonal price cuts deeper each year; especially given that the cost of importing many of the goods we buy increased with the post-referendum fall in the pound.
“Consumers have little to fear in terms of inflation over the coming months, with many of the underlying pressures on prices easing. That is unless the UK leaves the EU without a deal on the 29th March, leading to increases in the
price of many goods in the weekly shopping basket.”
Mike Watkins, head of retailer and business insight at Nielsen, added: “Intense price competition between food retailers at the start of the year is protecting customers from rising prices and there is no inflationary pressure coming from the high street as retailers, faced with weak demand, continue to absorb the impact of any rising costs themselves.”
(c) Sky News 2019: ‘Less heavy discounting’ in January sales – retail body