Shop price inflation rises again but fashion is down due to clearance sales
Shop price inflation continues to rise, despite hopes that it would begin to ease soon. The latest BRC-NielsenIQ Shop price Index for January showed it acerbating to 8% from 7.3% in December.
That was also above the 7.5% three-month average end means that shop prices are at record highs.
While food inflation was the biggest factor, non-food inflation accelerated as well, reaching 5.1% in January from 4.4% in December. It was a fresh high for the non-food category and coming in a month when clearance sales are in full swing (meaning there were plenty of price reductions in stores) it showed just how big an impact inflation is having.
However, those price reductions did show up strongly in the fashion sector and Helen Dickinson, Chief Executive of the British Retail Consortium, said that “clothing and footwear prices eased, so customers were able to replenish their wardrobes with some bargains during the January sales”.
But with costs still high for fashion retailers, it all suggests that profits are being hurt as businesses focus on shifting AW23 inventory ahead of new-season deliveries.
How strong a reception those new deliveries will get is open to question. Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, said: “Consumer demand is likely to be weak in Q1 due to the impact of energy price increases and for many, Christmas spending bills starting to arrive. So the increase in food inflation is going to put further pressure on household budgets and it’s unlikely that there will be any improvement in the consumer mind-set around personal finances in the near term. With shoppers having less money to spend on discretionary retail having paid for their essential groceries, there will be little to stimulate demand across the non-food channels.”
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